The Safe Investing Blog

Stock Market Outlook entering the Week of November 10th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, after a bullish response to U.S. election results and another rate cut by the FOMC.

The S&P500 ( $SPX ) rallied 4.7%.  The index sits ~5% above the 50-day moving average and ~11% above the 200-day moving average.

SPX Price & Volume Chart for Nov 10 2024

All three signals are back to an uptrend.  The ADX ( Average Directional Index ) and Institutional Activity rejoined OBV ( On-Balance Volume ) in bullish territory.

S&P Sector Performance for Week 45 of 2024

Utilities ( $XLU ) shifted back to bullish from neutral and Real Estate ($XLRE ) switched from bearish to neutral.  The energy sector ( $XLE ) was the biggest mover, jumping from bearish to bullish bias with a 6.5% gain.  Industrials ( $XLI ) also outperformed with a gain of 6%.  The worst sector was Consumer Staples ( $XLP ) with a gain of less than 1%.

Sector Style Performance for Week 45 of 2024

Low Beta, Small Cap Value, Quality and High Dividend sector styles moved back to a bullish bias last week.  Small Cap Growth ( $IWO ) led the way higher (same as the week prior), while High Dividend ( $SPHD ) underperformed the general index by 3%.

Asset Class Performance for Week 45 2024

Bitcoin ( $IBIT ) was the best asset class, rallying another 11%, while gold ( $GLD ) fell nearly 2%.  Oil ( $USO ) shifted from bearish to neutral bias as well.

COMMENTARY
Election-related volatility stole the show last week, with most risk assets responding with strong upside moves to expected policy shifts.  That said, most asset classes, equity sectors, and investing styles are now overbought.

In other macro news, Services PMI was expansionary and higher than expected, hitting levels last seen in 2022.  Adding more juice to the economy, the FOMC cut rates another 25 bps, citing strong economic data and tame inflation levels.  However, they still feel their policy is restrictive, and plan to continue the current rate cutting cycle, albeit at a “slower” pace.

Behind the scenes, the Federal Reserves balance sheet run-off (i.e. QT) continues, with assets down to roughly the April 2020 level, or the balance after the first wave of Covid-19 quantitative easing.  There are some rumblings about financial sector liquidity, because the reverse repo facility is below $200b for the first time since 2021.

During the coming week, we’ll get another set of inflation data (October CPI/PPI), along with more earnings reports.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of November 3rd = Uptrend

• ADX Directional Indicators: Downtrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Mixed

ANALYSIS
The stock market outlook remains in an uptrend, but is on the verge of a trend change after another week of poor performance.

The S&P500 ( $SPX ) fell 1.4%.  The index sits ~0.5% above the 50-day moving average and ~7% above the 200-day moving average.

SPX Price & Volume Chart for Nov 03 2024

The ADX ( Average Directional Index ) flipped to bearish on Thursday, as the market continued its recent trend of lower highs and lower lows.  An ADX reading greater than 25 (currently 23) would confirm the signal.

OBV ( On-Balance Volume ) remains bullish, sitting just above the 3-month moving average.

Institutional Activity moved to mixed, as increased selling pushed the index down to the 50-day moving average and the distribution day count up to 7.

S&P Sector Performance for Week 44 of 2024

Bias took a negative shift last week, with several sectors moving to a bearish ($XLP, $XLE, $XLV, and $XLRE), while Materials and Utilities are now neutral.  The Communication Services sector ( $XLC ) outperformed, largely due to Google’s ( $GOOG/$GOOGL ) performance.  Rate sensitive sectors, like Real estate ( $XLRE ) and Utilities ( $XLU ), were the weakest sectors, in response to rising Treasury yields.

Sector Style Performance for Week 44 of 2024

Low Beta, Small Cap Value, Quality and High Dividend sector styles moved to a Neutral bias.  Small Cap Growth ( $IWO ) was one of two styles able to eek out a gain last week, while High Beta ( $SPHB ) led to the downside.

Asset Class Performance for Week 44 2024

As expected, oil ( $USO ) retained the bearish bias that developed last Sunday evening, and went on to end the week as the worst asset class.  Bitcoin was the best class ( $IBIT ).  

COMMENTARY
ISM Manufacturing PMI continues to show a contraction in the sector, with demand weakening month over month.

September JOLTS was below expectations and fell from a negatively revised August number, indicating a cooling labor market. October NFP figures were far below expectations, but likely impacted by the strikes at Boeing and recent hurricanes. More concerning were the negative revisions to August AND September figures.

The “advance” Q3 GDP estimate showed an increase of 2.8%,  slightly lower than Q2, but well below the 4.4% seen last year.

Headline PCE for September showed inflation dropped slightly from a positively revised August figure, while core was flat.

This week we get ISM Services PMI ( Tuesday ), and the FOMC’s verdict on another rate cut ( Thursday ).  U.S. elections are on Tuesday, so don’t be surprised by volatility on Tuesday and Wednesday.

You don’t need to wait for those events to protect yourself from volatility. When trades shift to bearish bias, it’s time to lower exposure anyway. Instead, look to put your money to work using investments that are showing signs of strength.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 27th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, after the S&P500 ( $SPX ) fell 1% last week.  The index sits ~2% above the 50-day moving average and ~9% above the 200-day moving average.

SPX Price & Volume Chart for Oct 27 2024

All three indicators ( Average Directional Index, On-Balance Volume, and Institutional Activity ) remain bullish, although they all weakened during the week too.  It’s not too concerning at this point, with most of the S&P segments remaining bullish bias.  Keep an eye out this week for further developments.

S&P Sector Performance for Week 43 of 2024

Almost every sector followed the S&P500 lower last week, with stocks in the Materials sector ( $XLB ) leading the way.  Consumer Discretionary ( $XLY ) outperformed, in large part due to Tesla’s ( $TSLA ) post-earnings performance.  Healthcare ( $XLV ) weakened further, falling from a neutral to bearish bias, while Consumer Staples ( $XLP ) dropped to Neutral.

Sector Style Performance for Week 43 of 2024

All sector styles start the week with a bullish bias, but last week’s performance was poor across the board.  Large cap growth managed to breakeven ( $IWF )  on the strength of Mag 7 stocks, while small cap value ( $IWN ) led to the downside.

Asset Class Performance for Week 43 2024

As of Friday’s close, oil ( $USO ) was back to a bullish bias and led assets higher.  Last week’s rally was front-running Israeli military action against Iran.  As of Sunday evening, oil futures are down again and have a bearish bias. Bitcoin was the worst sector ( $IBIT ), but appears to have recovered over the weekend.

COMMENTARY
September Durable Goods orders fell 0.8%, slightly less than expected, but well off last year’s 4% increase.

After a couple quiet week’s, macroeconomic data is back in the spotlight this week:  September JOLTS ( Tuesday ), the “advance” ( i.e. first ) Q3 GDP estimate ( Wednesday ), September PCE ( Thursday ), and October NFP & ISM Mfg PMI ( Friday ).  And don’t forget earnings season is in full swing, which can move prices around significantly ( e.g.Tesla last week ).

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 20th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook remains in an uptrend, after the S&P500 ( $SPX ) rose 0.9% last week.  The index sits ~4% above the 50-day moving average and ~11% above the 200-day moving average.

SPX Price & Volume Chart for Oct 20 2024

All three indicators ( Average Directional Index, On-Balance Volume, and Institutional Activity ) remain bullish after last week’s action.

S&P Sector Performance for Week 42 of 2024

Within the S&P500, Healthcare ( $XLV ) drops to a neutral bias, reflecting recent weakness in the sector.  Stocks in the Utility sector ( $XLU ) outperformed last week, followed closely by Real Estate ( $XLRE ).  Energy ( $XLE ) underperformed, following oil-related assets lower.

Sector Style Performance for Week 42 of 2024

All sector styles retain a bullish bias this week.  Value names ( $IWN & $IJJ ) led to the upside last week, while High Beta ( $SPHB ) and Defensive ( $POWA ) names led to the downside.

Asset Class Performance for Week 42 2024

After a strong showing the past few weeks, Oil stumbled and now joins Bonds with a bearish bias.  Bitcoin continues it’s recent rally, while Gold continues it’s slow and steady climb since early August.

COMMENTARY
Another light week for macro data.  September retail sales came in at 0.4%; slightly above expectations but down 50% year over year.

Another heavy week of earnings reports on tap.  Forward guidance is key, so keep an eye on those conference call transcripts.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 13th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook maintains an uptrend after digesting the latest inflation data.

The S&P500 ($SPX) rose 1.1% last week.  The index sits ~4% above the 50-day moving average and ~10% above the 200-day moving average.

SPX Price & Volume Chart for Oct 13 2024

All three indicators ( Average Directional Index, On-Balance Volume, and Institutional Activity ) remain bullish after last week’s action.

S&P Sector Performance for Week 41 of 2024

Within the S&P500, all sectors start the week with a bullish bias.  Stocks in the Technology sector ( $XLK ) outperformed last week, along with Industrials ( $XLI ).  Utilities ( $XLU ) underperformed, as did other rate sensitive investments.

Sector Style Performance for Week 41 of 2024

Style-wise, everything starts the week with a bullish bias as well.  Momentum ( $MTUM ) and High Beta ( $SPHB ) led to the upside last week, while high Dividend ( $SPHD ) led to the downside.

Asset Class Performance for Week 41 2024

A majority of asset classes start the week with a bullish bias too.  However, U.S treasury rates continuing to climb, despite the recent FOMC rate cut.  As a result, bonds underperformed, along with bond proxies, such as Utilities and High dividend stocks.  Oil ( $USO ) outperformed for the second week in a row.

COMMENTARY
During strong market rallies, when most assets are bullish, it’s important to harvest profits from overbought investments and redistribute those gains into sectors, styles, and asset classes that are oversold.  For instance, reducing position sizes in Industrial names, and adding to positions in Utilities or Gold.

The consumer price index (CPI) fell for the sixth month in a row, down to 2.4% y/y in September.  Core CPI was slightly higher.

Producer prices (PPI) rose in September, exceeding expectations.  Revisions to the August data set softened the blow somewhat (*August Core PPI was revised higher from 2.2% to 2.6%, while August’s Headline figure increased by 0.2%).

Earnings releases pick up on Tuesday, and we get retail sales data on Thursday.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 6th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook maintains an uptrend, as market participants gear up for the start of earnings season.

The S&P500 ($SPX) rose 0.2% last week.  The index sits ~4% above the 50-day moving average and ~10% above the 200-day moving average.

SPX Price & Volume Chart for Oct 06 2024

All three indicators ( Average Directional Index, On-Balance Volume, and Institutional Activity ) remained bullish after last week’s action.

S&P Sector Performance for Week 40 of 2024

Within the S&P500, the Energy sector ( $XLE ) blew away everything else last week, rallying almost 7%.  The volatility in commodity prices has really whipped the sector around lately.  Staples ( $XLP ) were the laggard, and have begun to lose key technical levels, along with stocks in healthcare and real estate.

Sector Style Performance for Week 40 of 2024

Style-wise, returns were all over the place.  Momentum ( $MTUM ) ended up leading to the upside, while Small Cap Value ( $IWN ) led to the downside.  Despite the variation, High Beta and Momentum stocks have shown the most technical strength in recent weeks.

Asset Class Performance for Week 40 2024

As mentioned above, the volatility in commodity prices has bled through to equities; this week oil ( $USO ) outperformance gave the energy sector a much needed boost.  Bitcoin took the week off and underperformed, after leading to the upside for most of September.

COMMENTARY
September labor data came in hot, with JOLTs and NFP beating expectations for the labor market.  On the one hand, this is good news for the soft-landing camp, as the Fed raised rates and tamed inflation without disrupting the labor market.  One the other hand, talking heads will have a harder time justifying the need for aggressive rate cuts in the near-term.

The ISM survey showed manufacturing remains slightly “contractionary”, albeit unchanged from last month.  Services showed a small expansion.

The Longshoremen got back to work after a brief strike, so East Coast ports are operational again and all the people who stocked up on toilet paper can consider donating it to hurricane relief efforts.

We get September CPI and PPI data on Thursday and Friday, respectively.  Friday also brings with it the start of earnings season, with big banks reporting quarterly results. All in all, risk-on tickers show the most technical strength ( e.g. within $XLK, $XLC, $SPHB, $MTUM, $IBIT ), while lower volatility and safety trades have weakened ( e.g. $XLP, $XLRE, $SPLV, $SPHD, $IEF ).

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of September 29th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook shows an uptrend in place as we close out the third quarter.

The S&P500 ($SPX) rallied 0.6% last week.  The index sits ~4% above the 50-day moving average and ~10% above the 200-day moving average.

SPX Price & Volume Chart for Sept 29 2024

All three indicators (Average Directional Index, On-Balance Volume, and Institutional Activity) remained bullish last week.

S&P Sector Performance for Week 39 of 2024

Materials ($XLB) outperformed the broader market last week, reflecting the strength in commodities (excluding oil and gas) and perhaps frontrunning money spent supporting regional rebuilding efforts after hurricane Helene.  Energy ($XLE) was the laggard, thanks in large part to the weakness in oil and gas.

Sector Style Performance for Week 39 of 2024

Style-wise, High Beta ($SPHB) was the best sector for the third week in a row, while small cap value ($IWN) was the worst performer.  Risk-on indeed.

Asset Class Performance for Week 39 2024

Also benefiting from the risk-on trade was Bitcoin, which led asset class returns for the third week in a row.  Oil underperformed.

COMMENTARY
The final Q2 GDP reading showed an increase of 3% quarter / quarter; almost double the first quarter increase of +1.6% q/q, and outpacing the Q2 2023 figure of +2.4%.   With Q3 already in the books, any “hard landing” data won’t hit the official measures until sometime in the 4th quarter.

Headline PCE from August showed inflation dropping a bit more than expected, while core was inline (thought slightly higher vs. July).

But no one cares about inflation anymore.  September labor data is due out this week, which is the new “king” of all things rate cut related, along with the latest ISM survey data for manufacturing and services.

So far, increased geopolitical “activity” in the Middle East hasn’t significantly impacted major markets or economies.  Regional conflicts have a way of creating unintended consequences outside the region, and there are several fronts that are currently “hot”.

Closer to home, workers at East and Gulf Coast ports at set to strike on Tuesday, essentially freezing ports from New England all the way to Texas.   Negotiations between the International Longshoremen’s Association and the U.S. Maritime Alliance haven’t progressed in months, with neither side meeting in person since the summer. The strike will strand container goods, from produce to electronics, as no one will be loading or unloading the ships. Even a short stoppage could impact corporate earnings in the coming months, not to mention prices paid by consumers.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.