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Technical Update (Key Support and Resistance Levels)

What’s in Today’s Report:

  • Technical Update (Key Support and Resistance Levels to Watch)
  • Jobs Report Preview (Still a Very Important Report)
  • EIA/Oil Market Update

Futures are modestly higher mostly on momentum from Wednesday’s rally, following a quiet night of news.

On trade, China’s Ministry of Commerce said the two sides remained in close communication, but we already knew that and there were no new/notable trade headlines overnight.

Economic data was notably bad.  EU Retail Sales, German Manufacturers’ Orders, Australian Exports and Australian Retail sales all badly missed expectations, and while you wouldn’t know it according to stocks, the outlook for the global economy remains uncertain.

Today there is just one economic report to watch, Jobless Claims (E: 220K) and one Fed speaker: Quarles (10:00 a.m. ET).  So, as has been the case all week, markets will trade-off any new U.S./China trade commentary or headlines.  But barring negative news, the path of least resistance for stocks today appears higher once again.

Tom Essaye Quoted in ETF Trends on November 26, 2019

“The market still expects a phase one deal that (most importantly) removes the threat of any further escalation in the trade war. But unless there is a material positive surprise, phase one is not going to include material existing tariff reductions…” said Tom Essaye, founder of The Sevens Report, in a note.

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Tom Essaye Quoted in CNBC on November 25, 2019

“The market still expects a phase one deal that (most importantly) removes the threat of any further escalation in the trade war. But unless there is a material positive surprise, phase one is not going to include material existing tariff reductions…” said Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.

New York Stock Exchange Traders

Tom Essaye Quoted in CCN on November 22, 2019

Tom Essaye of Sevens Report Research told CNBC that a sizeable crash could be coming for the stock market if talks devolve: If there’s not a China trade deal, you are going to see the S&P 500 go down 10% in a heartbeat. It’s going to fall fast. If the talks collapse this time…Click here to read the full article.

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Tom Essaye Was Quoted in Axios on November 20, 2019

“The sooner … phase one is signed (regardless of the details) the better, because both sides want a deal, so the longer it’s delayed, the more the market will begin to…” Tom Essaye, founder of market research firm Sevens Report Research, wrote in a note to clients. Click here to read the full article.

Tom Essaye Headshot

Whose Telling the Truth on U.S./China Trade? Stocks or Treasuries?

What’s in Today’s Report:

  • The Current State of U.S./China Trade Negotiations:  Whose Telling the Truth?  Stocks or Treasury Yields?
  • Why A Spike in Jobless Claims Caught Our Attention (Highest Since June)

Futures are marginally higher as the U.S./China trade saga remains the singularly dominant influence on markets.

The commentary overnight was positive as Larry Kudlow said the “mood music” of the negotiations was “pretty good” and a deal is close, although there was no actual new information presented.

Economically there were no surprises as EU HICP (their CPI) rose 1.1%, as expected.

Today there are several important economic reports including (in order of importance):  Retail Sales (E: 0.2%), Empire State Manufacturing Survey (E: 5.0) and Industrial Production (E: -0.4%).  Broadly, markets need to see strong data to imply the U.S. economy is stabilizing and starting to re-accelerate.

But, beyond the data, U.S./China trade will remain a huge influence over stocks so any more headlines that a phase one deal is imminent will likely send stocks higher (even if there is no actual news contained in the comments).

Valuation Update: Dangers of FOMO (Fear of Missing Out)

What’s in Today’s Report:

  • Valuation Update:  Dangers of FOMO (Fear of Missing Out)

Futures are slightly lower as a potential “stall” in U.S./China trade talks and disappointing data weigh marginally on global stocks.

Chinese economic data was universally disappointing, as Fixed Asset Investment, Retail Sales and Industrial Production all missed estimates.  The soft numbers implied the global economic rebound expected by stocks isn’t a done deal just yet.

Today there are two notable economic reports, Jobless Claims (E: 215K) and PPI (E: 0.3%) and a figurative parade of Fed speakers including (in order of importance):  Powell (10:00 a.m. ET), Clarida (9:10 a.m. ET), Evans (9:10 a.m. ET), Daly (11:45 a.m. ET), Williams (12:00 p.m. ET), Bullard (12:20 p.m. ET).

But, the data points shouldn’t move markets, and neither should any of the Fed speak because Chair Powell spoke yesterday and clearly signaled the Fed is on hold, which is what the market expects and has priced in.

So, we can expect trade commentary and headlines to move markets.  Clearly the market is ignoring the phase one “stall” headlines, otherwise, stocks would be down sharply this morning.  But, headlines worsen and the stall increases the risk of a phase one breakdown, that will hit markets hard.

Tom Essaye Quoted in NBC News on November 7, 2019

“The market is already partially pricing in removal of the tariffs that were implemented on Sept. 1. That also means the risk is of disappointment is now real on an actual phase-one announcement, because if all we get is…” said Tom Essaye, founder of The Sevens Report, in a note to clients. Click here to read the full article.

Stock traders

Why Markets Are Ignoring Bad Data

What’s in Today’s Report:

  • Why Markets Are Ignoring Bad Economic Data

Futures are slightly higher following a generally quiet night of mixed earnings.

On the earnings front, AMZN missed earnings badly but INTC posted strong numbers and the two are largely offsetting one another.

Regarding U.S./China trade, there is a phone call between the two countries today where China will ask for the December tariff increases to be formally scrapped and the 9/1 tariff increases to be rescinded. If this happens, it’s a positive surprise.

Today the calendar is quiet as we have just one economic report, Consumer Sentiment (E: 96.0) and only a few notable earnings reports, VZ ($1.24) and BUD ($1.36).

So, focus will be on that U.S./China trade call, and if we see the September tariff increases rolled back, that will likely send the S&P 500 to new all-time highs.

Tom Essaye Interviewed with Yahoo Finance on October 24, 2019

Major indexes are mixed today after major companies like Microsoft, Twitter, and Tesla reported earnings. Founder of The Sevens Report Tom Essaye joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss. Click here to watch the full video.