Friday’s rally ended a week of volatile trading, giving investors a 2.3% return for the week. The S&P 500 is still down nearly 22% on the year, but the rumor is that the Fed will ease its monetary policy starting in December. That doesn’t mean lowering interest rates, but that might mean going from a 0.75 basis point increase to a 0.50 increase.
Once again, I heard, “The bottom is in! Buy, buy, buy!” I’m not as convinced but remember I said historically the market starts a rally after mid-October. Here’s the SPY chart, showing the next bullish sign would be a cross above the swing high of just under $380.
We will review the reports of the week, as we always do on Mondays, but first, there are a few developing stories that you should be aware of before getting too excited about a potential bottom.
Story 1: What’s the problem with Britain?
The British Prime Minister quit after 45 days in office, which hasn’t been a sign of stability that Britain needs since breaking from the European Union. Leadership is left to pick up the pieces as the country faces a global recession.
Story 2: Russia won’t back down.
Russia continues to extend fighting, shaking off mounting losses. While the U.S. has been content with supplying weapons, the war is escalating more than de-escalating, and eventually, that may require the U.S. to alter its response. However, U.S. foreign policy may be shifting soon.
Story 3: U.S. elections have major implications for foreign policy.
The U.S. midterms are only a few short days away, and we are now seeing the two sides split on how to handle the response to the Russian-Ukraine war.
Story 4: Tech earnings to watch.
Earnings are heating up and Alphabet (GOOG, GOOGL), Enphase (ENPH), and Apple (APPL) will be in focus this week.
Let’s review the reports likely to impact the markets this week, including GDP and Core PCE.
Monday – 9:45 am EST – PMI Composite Flash – This is an early estimate of the Purchasing Managers’ Index (PMI). A reading above 50 signals rising output versus the previous month and the consensus is 51.2. The question is if a positive number will be negative for the market because that means the fight against inflation will continue.
Tuesday – 10:00 am EST – Consumer Confidence – The last reading was 108 and this month the consensus is 106. A small move, either way, is not likely to have an effect on the markets and I don’t see enough news to show an unexpected reading.
Wednesday – 8:30 am EST – International Trade In Goods [Advance] – Imports and exports are set to decrease by -1.7% and -0.9%, respectively. As long as the dollar remains strong, the cost of importing American goods will make it difficult for several countries to purchase goods, thus decreasing the amount of U.S. exports.
Wednesday – 10:00 am EST – New Home Sales – The market is expecting to see an annualized rate of 585k new home sales, much lower than the previous month’s reading of 685k.
Wednesday – 10:30 am EST – EIA Petroleum Status Report – Crude Oil inventories are down week-over-week, showing us that the demand for oil isn’t decreasing.
Thursday – 8:30 am EST – Durable Goods Orders – The consensus is that new orders month-over-month are supposed to show an increase of 0.6% for the September timeframe.
Thursday – 8:30 am EST – GDP – This is one of the more important numbers to be reported. The traditional way of telling if we’re in a recession was to measure two-quarters of negative GDP growth, which we had. This report is expected to show a GDP growth of 2.3% quarter-over-quarter, up from last quarter’s reading of -0.6%.
Thursday – 8:30 am EST – Jobless Claims – The 4-week moving average remains low at 212.25k. Claims are expected to increase this week to 223k, but still well below my 300k threshold before I pay attention to this report.
Friday – 8:30 am EST – Personal Income and Outlays – This is probably the more important number being reported during the week. The FED has said they use Core PCE as their measure for inflation. The Core PCE year-over-year is expected to increase from 4.9% to 5.2%, however, the month-over-month reading is expected to decrease from 0.6% to 0.5%. Personal income is supposed to remain steady at a 0.3% increase from last month, while expenditures are supposed to increase by 0.4% from last month.
I’ll be back later this week and we’ll look at a potential earnings trade on Apple.
If you have any questions, comments, or anything we can help with, reach us at any time.
Email: [email protected]
Phone: (866) 257-3008
Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society
February 7th, 2023Is The Stock Market Cycle Pointing To A New Bull Market Already?Are we in another bear market rally or the start of something new? That’s what everyone wants to know, especially as we
February 6th, 2023Job Creation Shocks The MarketIf we’re heading into a recession, how were we met with better-than-expected job growth numbers last week? Unemployment dropped, despite the headlines of tech companies planning to lay off
February 3rd, 2023Job Cuts And Stock Buybacks Keys To Success In 2023 The thing I’ve learned from this earnings season is that a company can have consecutive quarterly drops in revenue and provide a lower
February 2nd, 2023Fed Raises Rates But Bulls Are Still In ControlOk, bulls. You win. I will start lifting my bearish stance on the market. Despite the final 10-minute market sell-off and a Dow that finished
February 1st, 2023What Past Fed Announcements Tell Us The Market Will Do TodayWatch out - this article is going to have some math.Here we are once again on Fed Announcement day. Most of the folks
January 31st, 2022The Hidden Profits Of 2023There is still one more trading day left in January, but if the adage “as the S&P 500 goes in January, so goes the year” holds true, the markets
January 30th, 2022 The Fed Goes Up Against Earnings This Week We are in peak earnings season with some heavy hitters like Pfizer (PFE), Snap (SNAP), Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL), and Apple
January 17th, 2022Smoother Sailing in 2023 Nothing has changed since the end of 2022, yet traders have already decided that this year won’t be as bad as the last. Bulls have been piling into stocks
January 12, 2023 The Rise Of Bing Over Google - That’s No Joke Before we talk about two tech giants getting ready to battle it out once again, let’s look at the overall market. The
January 9th, 2022 Why I Ignore Most Of The News It’s easy to get caught up in the financial headlines. I’ve certainly done it. Last week shows why I ignore most day-to-day stories. I know
267 Kentlands Blvd #225
Gaithersburg, MD 20878
P. (866) 257-3008
(Monday-Friday 9:00 AM-5:00 PM EST)
Publisher of actionable and proven strategies and tactics to help investors build wealth and reach seven-figure portfolios.
Get notified about new articles, special events, training, and much more
Leave your info below to get more options and trading ideas to your inbox
Yes, send me news to my inbox.