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Bullish Market Momentum

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Bullish Market Momentum: Tom Essaye Quoted in Barron’s

Stocks Look to Close Out Another Week of Gains

“If the Fed speakers stick to the same narrative (less hawkish) expect more of the same sideways, digestive trading in equities today with the threat of a continued move higher based on bullish market momentum,” Tom Essaye writes.

Sevens Report Research’s Tom Essaye adds that a handful of Federal Reserve officials will speak on Friday.

Stocks were little changed Friday, but poised to close out another week of gains.

Also, click here to view the full Barron’s article published on November 17th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Bullish Market Momentum

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Three Pillars of the Rally Updated

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Three Pillars of the Rally Updated: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Three Pillars of the Rally Updated (An Important Change to Watch)
  • Weekly Economic Cheat Sheet – Friday’s Flash Composite PMI in Focus

Futures are steady after a mostly quiet weekend of financial news and thinning volumes coming into the holiday-shortened Thanksgiving trading week.

Geopolitically, Iran-backed Houthi rebels seized a cargo ship in the Red Sea. This is rekindling a fear bid in global energy markets as seaborne oil cargoes are viewed as “at risk.” The rise in oil prices is modestly pressuring Treasuries this morning (yields up slightly).

Economically, German PPI met estimates of -11.0% Y/Y in October further solidifying the global peak-inflation argument.

Looking into today’s session, there is just one economic report on the calendar with Leading Indicators (E: -0.6%) due out shortly after the open and there is just one Fed speaker midday: Barkin (12:00 p.m. ET).

One potential catalyst that could shake up markets today is the 20-Year Treasury Bond auction at 1:00 p.m. ET as weak results could trigger a rebound in yields. Especially given fading attendance this week and subsequently less liquid market conditions across asset classes.

Three Pillars

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Understanding Why Stocks Rallied Part Two

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Understanding Why Stocks Rallied Part Two: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Understanding Why Stocks Rallied Part Two (Visual Aid)
  • EIA Analysis and Oil Market Update

Futures are little changed despite underwhelming earnings as markets further digest Tuesday’s rally.  There was no notable economic data overnight.

CSCO (down 11%) and PANW (down 5%) both posted disappointing earnings although the positive macro news from earlier this week is helping markets stay buoyant.

Today we have several important economic reports as well as numerous Fed speakers.  For the economic data, the key remains “Goldilocks” readings that aren’t so good it makes the market rethink dovish Fed expectations, yet not so bad it increases hard landing worries.  Key reports today include Jobless Claims (E: 222K), Philly Fed (E: -11.0), and the Housing Market Index (E: 40) and close to in-line readings for each will help markets continue to hold Tuesdays’ gains.

On the Fed front, there are a slew of speakers today but the most important one is Williams (9:25 a.m. ET) because he’s part of Fed leadership.  Don’t be surprised if Fed officials push back on the markets aggressively dovish expectations today but unless Williams comes out and says another rate hike is very possible, markets will likely ignore the rhetoric.  The list of speakers today includes:  Barr, Mester, Williams, Waller, and Cook.

Understanding Why Stocks Rallied

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Was the CPI a Bullish Gamechanger?

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Was the CPI a Bullish Gamechanger? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was the CPI Report a Bullish Gamechanger?
  • CPI Data Analysis and Takeaways

Stock futures are extending the November gains this morning and Treasuries are steady after more cool inflation readings in Europe and stabilizing economic data in China.

Economically, Chinese FAI and Industrial Production figures met estimates while Retail Sales importantly accelerated to 7.6% vs. (E) 7.0% in October up from 5.5% in September.

In Europe, CPI data from the U.K., France, and Italy all met estimates or came in “cooler” than expected. This bolsters the view that global central banks are done with rate hikes, fueling risk-on money flows today.

Today, there are several economic reports to watch early: PPI (E: 0.1% m/m, 2.0% y/y), Empire State Manufacturing Index (E: -3.0), and Retail Sales (E: -0.3%). The market will be looking for more signs of cooling inflation in the PPI release. And no major surprises either way in the Empire and Retail Sales releases as the market is still vulnerable to data that is “too hot” (risks of more Fed tightening) or “too cold” (risks of a “hard landing”).

There are also two Fed speakers today: Barr (9:30 a.m. ET) and Barkin (3:30 p.m. ET) but neither are expected to move markets.

Was the CPI Report a Bullish Gamechanger?

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What to Tell Clients Who Are Worried About U.S. Treasuries

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What to Tell Clients Who Worry About U.S. Treasuries

What’s in Today’s Report:

  • What to Tell Clients Who Are Worry About U.S. Treasuries.
  • Start a free trial of The Sevens Report.

Futures are little changed following a mostly quiet night of news as investors look ahead to today’s CPI report.

Politically, a “Continuing Resolution” to fund the government will be voted on in the House today and if passed, will avert a government shutdown.

Economically, the UK unemployment rate and German ZEW Business Expectations Index both beat expectations (although they aren’t moving markets).

Today focus will be on the CPI report and expectations are as follows:  CPI (E: 0.1% m/m, 3.3% y/y), Core CPI (E: 0.3% m/m, 4.1% y/y).  Generally speaking, numbers that show core CPI is continuing to decline will be welcomed by markets. While readings that imply the decline in inflation is “stuck” or inflation is bouncing back, will likely result in declines in both stocks and bonds.

We also have several Fed speakers today including Barr, Mester, and Goolsbee. We’ll be watching for their reaction to the CPI report. If it makes them more hawkish that’s a negative and more dovish, a positive).

What to Tell Clients

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CPI Preview: Good, Bad & Ugly

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CPI Preview: Good, Bad & Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview:  Good, Bad & Ugly
  • Weekly Market Preview:  Will Market Catalysts This Week Support A Further Rally?
  • Weekly Economic Cheat Sheet:  CPI Tomorrow, Key Growth Data the Rest of the Week

Futures are slightly lower as markets digest two slightly negative events from the weekend and look ahead to a week filled with possible market moving catalysts.

Moody’s downgraded the U.S. credit outlook to negative but importantly did not change the rating and as such it’s not significantly impacting markets.

Geo-politically, U.S. forces struck more targets in Syria over the weekend, escalating regional tensons but so far markets are not reacting (oil isn’t rallying off the news).

Looking forward, this is a potentially important week, but it starts slowly as there are no notable economic reports today nor any Fed speakers.

Beyond today, though, in addition to the economic catalysts this week, risk of another U.S. government shutdown is rising as there needs to be a short-term spending deal by Friday to avoid a shutdown.  So, any progress on that front today will help markets, while any negative headlines will likely provide a small headwind.

CPI Preview:  Good, Bad & Ugly

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Why Did Stocks Drop? (Familiar Reasons)

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Why Did Stocks Drop? S&P 500: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop? (Familiar Reasons)
  • What A Seven Month High In Continuing Jobless Claims Means for Markets

Futures are little changed following a quiet night of news. Markets digest Thursday’s two “hawkish” events (poor Treasury auction and Powell comments), the rebound in Treasury yields and stock pullback.

Economic data was mixed overnight as UK manufacturing slightly disappointed (0.1% vs. (E) 0.3%). While monthly GDP slightly beat (-0.2% vs. (E) -0.1%) but overall, the data isn’t moving markets.

Treasury yields will likely remain in control of this market and if they continue to rise, expect more declines in stocks.  From a data standpoint, the numbers that could move Treasury yields today are Consumer Sentiment (E: 64.5) and the Five-Year Inflation Expectations (E: 3.0%).  Markets will want to see in-line readings for both (or lower in the case of inflation expectations) to pressure yields.

We also have two Fed speakers today, Logan (7:30 a.m. ET) and Bostic (9:00 a.m. ET) but they shouldn’t move markets (Logan will likely be slightly hawkish and Bostic slightly dovish).

Why Did Stocks Drop?

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Earnings Season Takeaways

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Earnings Season Takeaways: S&P 500: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Earnings Season Takeaways (More Reasons to Expect A Growth Scare)
  • A Contrarian Case for Long Oil

Futures are little changed following a generally quiet night of news.

Economically, Chinese CPI declined –0.2% y/y, signaling mild deflation and increasing Chinese economic concerns.

Geopolitically, the U.S. struck weapons depots in Syria in response to attacks on U.S. bases in the region and that’s slightly increasing geo-political tensions.

Today focus will remain on economic data and Fed speak. As has been the case, any data or comment that pushes the 10 year Treasury yield higher will likely weigh on stocks.

Economically, the only notable report is weekly Jobless Claims (E: 220K) and that’s slightly deteriorated over the past few weeks.  If that continues and accelerates it could be a short term tailwind for stocks.

Looking at the Fed, there are multiple speakers today but Powel (2:00 p.m. ET) is the only potential market mover.  Other speakers include: Bostic, Barkin, and O’Neill-Paese.

Earnings Season Takeaways

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Important To Watch The S&P 500 Index’s Support Zone

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there’s no way The Fed Can Get Dovish: Tom Essaye Quoted in MarketWatch on MSN

Fed day is here. Here are important technical levels to watch for stocks, bonds, and VIX

It is important to watch the S&P500 index’s support zone from 4,050 to 4,170, where the index spent most of April and May, according to Tom Essaye, founder and president of Sevens Report Research. 
On the other hand, “if policy makers deliver a dovish message and signal the hiking cycle is indeed ‘over’ then a relief rally could see stocks rise rapidly back towards the October highs,” according to Essaye.
The first important technical resistance level to watch is 4,225, while beyond that, investors should keep an eye on the level of 4,330, where the index saw a mid-October reversal. For the 2023 stock market rally to resume, the S&P 500 has to beat its October high of 4,377, Essaye wrote. 
“There is growing evidence that the VIX may be forming a near-term top as the ‘fear gauge’ did not close at new October highs last week despite the S&P 500 falling to new multi -month lows,” Essaye wrote.

Also, click here to view the full article published by MSN on November 2nd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Index’s Support Zone

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

What Can Stop This Selloff?

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What Can Stop This Selloff? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Can Stop This Selloff?
  • Weekly Market Preview:  A Very Important Week of Earnings, Fed Decision and Economic Data
  • Weekly Economic Cheat Sheet:  A Busy Week (Jobs Report Friday, ISM PMIs Wed/Fri)

Futures are moderately higher on a small reduction in geo-political tensions and better than expected inflation data.

Geo-politically, Israel moved forces into Gaza over the weekend but the operation isn’t as large as feared (yet) and that’s helping to slightly reduce geopolitical anxiety.

On inflation, Spanish CPI rose 3.5% vs. (E) 3.8%, providing another reminder that global inflation is declining.

This week will be a very busy one as we get a Fed decision and important economic/inflation data, as well as the final “big” week of earnings.  But, it starts slowly as there are no economic reports today, so focus will be on earnings and some important reports today include:  MCD ($3.00), WDC ($-1.87), ON ($1.35), SOFI ($-0.07), ANET ($1.58).

What Can Stop This Selloff?

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.