News:
On Monday, markets welcome Q4 by roaring back to life. All four major indexes posted outsized gains as oversold conditions were relieved.
- Dow Jones +2.7%
- Nasdaq +2.3%
- S&P 500 +2.6%
- Russell 2000 +2.7%
UN Takes on Powell
The United Nations is calling on central banks to stop hiking interest rates.
- They warn the higher rates will lead to a “downward spiral” for “developing countries.”
- The Fed has hiked interest rates five times this year, raising them from 0% to 3%
- Fed Chair Powell has promised to fight inflation with rate hikes until the job is done.
Sector Round-Up
All 11 sectors posted gains on Monday. The top performers…
- Energy (XLE) +5.7%
- Materials (XLB) +3.3%
- Technology (XLK) +3.1%
At the bottom…
- Consumer Staples (XLP) +1.7%
- Consumer Discretionary (XLY) +0.1%
Your take-home: Investors bet heavily on industry and light on consumers.
Notable Names
Tesla (TSLA^) fell 8.6% on Monday, bucking the market trend. The reason? Take your pick…
- Tesla’s IA day revealed a slow-moving robot that failed to impress.
- Q3 vehicle deliveries set a new record but missed expectations
- CEO Elon Musk is trying to broker a peace deal between Russia and Ukraine using Twitter (TWTR^) polls.
Bitcoin^ recaptured $20,000 overnight. The world’s largest cryptocurrency has shown resilience over the last week amid the market turmoil.
- So far, the price action has fallen in line with our model.
- We remain a buyer at these levels.
Technicals:
It’s called a double bottom…
It’s a bullish reversal pattern that fits the seasonal narrative … October is a bear killer.
All our other signals agree.
- The VIX is falling
- RSI levels are back in neutral territory
- The Put-to-Call Ratio returned to neutral also
The market is primed to move higher over the next nine months.
Timing:
Q4 of a mid-term year is the start of the “sweet spot” we see every election cycle.
With history as a guide, investors can expect a rally to peak in Q2 of 2023.
We’ll closely monitor Earnings Season when it kicks off next week.
- News can trump season and signals.
- Our outlook remains bullish.
Watchlist:
*Low Float
^Open Position
*ATXI on watch
*BEAT resistance at $4.50
*SOBR resistance at $3.25
FNGR on watch
HROW resistance at $13
SAVA resistance at $50, support at $40
IMVT resistance at $7
EVTL support at $9
DCPH support at $17
RVNC resistance at $29
FREY support at $14, resistance at $15
HLIT support at $12
CANO support at $8, resistance at $9
SBS support at $11