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How Far Can Stocks Run (New Technical Targets)

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What’s in Today’s Report:

  • How Far Can Stocks Run? (New Technical Targets)
  • Why Did the Dollar and Treasury Yields Fall So Hard?

Futures are modestly higher on continued momentum from Thursday’s CPI report and as Chinese officials further signaled changes to their “Zero COVID” policy.

China made more than 20 changes to COVID policies overnight, all of which relaxed COVID rules and further signaled a departure from “Zero COVID.”

Economic data was mixed as German CPI met expectations at 10.4%, while UK GDP and Industrial Production were slightly better than expected.

Today the only notable number is Consumer Sentiment (E: 59.6) and specifically the Five-Year Inflation Expectations Index.  If that number falls further away from 3.0% (and drops to or below 2.7%) that will further fuel the idea that inflation pressures are receding, and stocks should extend the rally.

Sevens Report Analysts Quoted in ZeroHedge on November 8th, 2022

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WTI Extends Losses After API Reports Large Unexpected Crude Build

“The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon,” wrote analysts at Sevens Report Research. Click here to read the full article.

Sevens Report Analysts Quoted in Market Watch on November 8th, 2022

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Oil prices log back-to-back losses as investors assess China demand outlook

“The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon,” wrote analysts at Sevens Report Research. Click here to read the full article.

Market Multiple Table: November Update

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What’s in Today’s Report:

  • Market Multiple Table – November Update
  • Chart – Value Stocks Down Just 5% YTD vs. More than 33% for Growth Stocks

Futures are lower while bond yields and the dollar are edging higher after Republicans likely took control of the House but disappointed versus expectations in the Senate races. The result is still seen as being some form of a split Congress, however, which is historically favorable for markets.

Economically, Chinese CPI fell to 2.1% vs. (E) 2.4% Y/Y and PPI was -1.3% vs. (E) -1.6% but the data did not move markets overnight as the focus in China is on reopening plans and not inflation pressures.

Looking into today’s session, there are no market-moving economic reports which will leave the focus on the midterm election results, and if Democrats do end up keeping the House (which is possible, but unlikely) expect a mild reversal of the WTD gains.

Outside of the election news, there are two Fed officials speaking today: Barkin (11:00 a.m. ET) and Kashkari (1:00 p.m. ET) and a 10-Yr Treasury Note auction at 1:00 p.m. ET. Any meaningful dovish commentary or a strong auction could support a near-term equity rally but moves should be limited ahead of tomorrow’s CPI report.

Sevens Report Analysts Quoted in Zero Hedge on October 25th, 2022

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WTI Holds Gains Despite API Reporting Unexpectedly Large Crude Build

The Sevens Report Research analysts said oil’s new trading range spans “between support in the upper $70s and resistance in the low $90s, as traders assess the outlook for demand amid growing recession concerns but still-tight global supply dynamics.” Click here to read the full article.

Tom Essaye Quoted in Barron’s on October 25th, 2022

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Stocks Rise A Third Day Ahead of Tech Earnings

Since Friday’s renewed hopes for peak-hawkishness, bad news is good news for markets,” wrote Sevens Report’s Tom Essaye. Click here to read the full article.

Sevens Report Analysts Quoted in Market Watch on October 25th, 2022

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Oil prices finish higher with supply concerns back in focus

“The negative China headlines and soft U.S. economic data were demand-side negatives for oil. However, hopes for peak-hawkishness bolstered risk assets” analysts at Sevens Report Research wrote in a Tuesday newsletter. Click here to read the full article.

A Critical Week for Stocks

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What’s in Today’s Report:

  • A Critical Week for Stocks
  • Weekly Market Preview:  Will the Fed confirm smaller rate hikes in the months ahead?
  • Weekly Economic Cheat Sheet:  Is the U.S. economy quickly losing momentum?

Futures are modestly lower following disappointing inflation data and as Russia suspended grain shipments from Crimea.

EU HICP (their CPI) ran hotter than expected, rising 10.7% vs. (E) 10.2% y/y while Core HICP rose 5.0% vs. (E) 4.8%, again showing that inflation pressures are not easing.

Russia suspended grain shipments in response to rocket attacks on Crimea, sending wheat prices sharply higher which will add to inflation pressures.

Today there are no economic reports but there are some notable earnings, especially from the semi-conductor companies and some companies we’re watching include:  ON ($1.31), NXPI ($3.62), CAR ($14.80).

Tom Essaye Quoted in MorningStar on October 24th, 2022

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Gold futures retreat after Friday’s wild ride

“The trend is still lower for now but once we can actually say we have reached peak-hawkishness, the outlook for gold will very likely shift to neutral (if not bullish) from bearish,” said Tom Essaye, a former Merrill Lynch trader and the founder of the Sevens Report newsletter. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on October 21st, 2022

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Oil ends higher; natural gas prices post a weekly loss of more than 20%

“The Biden administration introduced an ‘SPR put’ to the oil market this week when they announced purchasing crude to replenish reserves when prices dip towards $70 a barrel,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.