Good Friday evening to all of you here on r/StockMarket. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead.
Here is everything you need to know to get you ready for the trading week beginning November 1st, 2021.
Markets could be challenged in the week ahead as the Fed prepares to reverse easy policy - (Source)
The Federal Reserve is expected to take its first major step away from the easy policy it put in place to fight the pandemic, a milestone on the road back toward normal.
The Fed's two-day meeting Tuesday and Wednesday is the big event for markets in the week ahead. The central bank is widely expected to announce that it will begin to unwind its $120 billion in monthly bond purchases and end the program entirely by the middle of next year.
Economic data will also be important, with the October jobs report on Friday. There are dozens of earnings expected, including pharmaceuticals like Pfizer and Moderna, as well as a host of travel, energy, insurance, and tech companies.
The Bank of England also meets Thursday, and it is expected to raise interest rates. The move comes after rate hikes by South Korea, Norway and others.
"The Fed is part of a global move to remove accommodation, and the market drives right past that," Bleakley Advisory Group CIO Peter Boockvar said. "In a way, the stock market is playing a game of chicken, with this inflation move and interest rates and the response from central banks."
Inflation has been running at a 30-year high. Core PCE inflation — which is the Fed's preferred gauge —jumped 3.6% in September on a year-over-year basis, the same as in August.
Stocks were higher on the week, with the S&P 500 up about 1.1% as of Friday afternoon and up roughly 6.7% for the month of October. Both the Dow and S&P 500 notched new highs in the past week. The widely watched 10-year Treasury yield was at 1.53% Friday afternoon.
"There is an incredible level of complacency out there in this environment," Boockvar said.
Other events the markets are monitoring include the gathering of world leaders at the G-20 in Italy and the United Nations climate summit COP26, beginning Sunday in Scotland.
'Wild week'
"You're going to have a wild week," Wells Fargo's Michael Schumacher said. He noted that the Fed's action will dominate the week, and the jobs report will be secondary.
Wells Fargo economists expect 390,000 jobs were added in October and average hourly earnings grew by 0.4%, he noted. Payrolls were up just 194,000 in September. Schumacher said inflation is the biggest concern in the markets, so the wage data will be most closely watched.
Schumacher said the market is widely expecting the Fed to announce it will reduce its bond purchases by $15 billion a month, starting either in November or December. The central bank implemented its $120 billion monthly bond-buying program in early 2020, as it slashed rates and introduced programs to buy a range of assets to help keep the markets liquid.
Now, as the program is being wound down, it is what Fed Chairman Jerome Powell says about inflation that matters most because that will drive interest rate expectations.
Yet, Powell is expected to stress that the Fed is not automatically going to raise interest rates once the bond purchases end in the middle of next year. Traders are pricing in as many as three interest rate hikes next year, but in the latest Fed forecast, only half of central bank officials agreed there should be even one.
"The inflation commentary is a lot more important," Schumacher said. "Powell has sounded concerned about expectations getting baked in." He noted that the 2-year yield, which most reflects the Fed, has risen more than 30 basis points since the last Fed meeting five weeks ago.
Schumacher said market expectations for rate hikes may be overdone, and that he does not expect a move until the beginning of 2023. "The direction is right, but the speed is wrong," he said.
Powell's comments will be closely watched for any adjustment in his thinking on inflation. The Fed had described the surge in rates as "transitory" or temporary. The consumer price index has been running above 5%, and core CPI was at 4% in September.
"The general feeling among central bankers and the major central banks is this inflation rate will come back down," TIAA Bank president of world markets Chris Gaffney said. "Nobody is using 'transitory' anymore, but they don't feel like we're going to have prolonged high inflation."
Gaffney said the weaker-than-expected 2% growth in third-quarter gross domestic product could help the Fed convince the markets that it intends to keep rates lower for longer.
"As long as they stay accommodative, I think the recovery continues," he said. "I'm fairly bullish for the markets going forward. We'll certainly see a lot more choppiness, but I still think the global economy, the U.S. economy particularly, is right now a great environment for corporations. We're seeing fairly positive earnings reports, and more importantly expectations for future earnings."
There have been some high-profile misses, including both Apple and Amazon this past week. Both their stocks fell, weighing on the Nasdaq down Friday.
"Earnings overall have been good, but there's still a lot of profit margin challenges out there," Boockvar said. "There's no better example than Apple and Amazon."
This past week saw the following moves in the S&P:
S&P Sectors for this past week:
Major Indices for this past week:
Major Futures Markets as of Friday's close:
Economic Calendar for the Week Ahead:
Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:
S&P Sectors for the Past Week:
Major Indices Pullback/Correction Levels as of Friday's close:
Major Indices Rally Levels as of Friday's close:
Most Anticipated Earnings Releases for this week:
Here are the upcoming IPO's for this week:
Friday's Stock Analyst Upgrades & Downgrades:
November's First Trading Day: DJIA Up Over 1% Three Years in a Row
Based upon data in the 2022 Stock Trader's Almanac on page 90, the first trading day of November is the fourth best of all monthly first trading days since September 1997 based upon total DJIA point gained. DJIA, S&P 500 and NASDAQ have all advanced 13 times over the last 21 years. Average performance on the day ranges from a low of 0.17% by S&P 500 to 0.28% by NASDAQ over the 21-year time period.
Here Comes One of the Best Days of the Year (and the Best Week and Month)
The calendar is about to do a lot of favors for the bulls, as late October and early November historically are quite strong.
October 28 was the best day of the year, until it fell more than 3% last year, but this day is still one of the strongest days historically for stocks. Not to be outdone though, October 29 and November 2 and 3 are also some of the better days of the year. "I'd like to think it has something to do with my birthday being on October 28, but the truth is bulls should be aware that the coming days are historically some of the best of the year," explained LPL Financial Chief Market Strategist Ryan Detrick.
As shown in the LPL Chart of the Day, the single best day to buy at the close and hold for the next five trading days is today, October 27. Yes, these 5 days were lower last year by 0.6%, but you have to go back to the late 1960s to see the last time they were down two years in a row.
Lastly, November has been quite strong historically. In fact, since 1950, and the past 10 years, it is the best month of the year, while it ranks second over the past 20 years and during a post-election year. "November is the best month of the year, but it doesn't seem to get nearly as much love as you'd think," added Ryan Detrick. "We all assume December is the best month, but November is actually better and gets very little fanfare. Maybe it should be a month for the bulls, not for turkeys."
Year's Best 3-Month Span About To Start
November, December and January constitute the year's seasonally strongest 3-month period for the S&P 500, Dow Jones Industrials and the NASDAQ Composite. This seasonal strength is created by a combination of the annual, semiannual and quarterly operations of institutions and the habitual behavior of retail investors and consumers.
The November-January 3-month span has produced a gain of 4.3% for the S&P 500 & DJIA since 1949. October-December runs a close second at 4.1% for S&P and 3.9% for DJIA. Since 1971 NASDAQ has gained a whopping 6.3% November-January with December-February in second at 5.0% and October-December in third at4.4%.
These charts also highlight the Best and Worst Months of the year with the Best running from October/November to April/May/June and the Worst from May/June/July to September/October. Stocks have been firming up since we issued our Seasonal MACD Buy Signal to subscribers on October 8 and look poised for a solid yearend rally that continues into early 2022.
Short Term Breadth Takes Off
One of the points noted about the recent moves for the S&P 500 over the past few days have been on the outsized impacts of big gains or losses in names like Tesla (TSLA) or Facebook (FB). In spite of the impacts of those single names, the S&P 500's return to record highs has happened on very strong breadth across sectors. Below, we show 10-day advance-decline line charts from our Sector Snapshot.
The 10-day advance/decline line measures the average daily number of advancers minus decliners in an index or sector over the last ten trading days. It's a short-term breadth measure that traders use to measure how extended the market is at the moment. Very high readings suggest that the market might be overbought in the near term, and downside mean reversion can be expected. Very low readings suggest the opposite -- that the market might be oversold in the near term, and upside mean reversion can be expected.
For the broad S&P 500, the 10-day AD line has hit the highest level since February 12th. Going back to 1990, the current reading stands in the 97th percentile. Looking at each sector, most lines are also in the upper decile of readings since 1990 and only two are not currently overbought: Communication Services and Consumer Staples. Meanwhile, some like Technology and Real Estate are a full two standard deviations above the historical norm. In fact, the Tech sector's line is the most elevated relative to its respective history of any sector with the current reading in the 98th percentile of all periods. The last time that the line was as elevated as now was in November of last year. No other sector has as long of a gap in time in which it has seen levels similar to the current reading. Most other sectors have seen higher readings as recently as August or September, though current levels are nonetheless elevated. The market has had quite the run over the last two weeks, and we'd expect some sort of cool-off period soon.
High Number of Record Highs
Major US equity indices have returned to all-time highs in the second half of October with the S&P 500 and Dow both hitting record levels today. Meanwhile, the NASDAQ Composite is roughly a quarter of one percent away and the closest to a new all-time high since the last one on September 7th. The Russell 2,000, on the other hand, is at the high end of the past several months' range, but it is still over 2% below its high from March 15th.
With the S&P 500 having been at new highs over the past few days, it has made 57 new all-time highs year to date. As shown in the top-left chart below, there have only been three other years in the past that have seen more record highs during the full course of the year: 2017 (62), 1964 (67), and 1995 (78). For the other major indices, the pace of record highs is less impressive but still strong. The Dow has made 38 new highs in 2021 which is more than triple the historical average. This year is on pace to see the highest number of record highs for the index since 2017 when it tied 1991 for the record of 71 closes at an all-time high. The NASDAQ Composite has also seen a solid number of highs at 36 which is well above the historical average of 19 per year historically. Given the index has been rangebound essentially all year, the Russell 2,000, conversely, has only seen 13 closing record highs. That is the same number as last year and it is actually below the average of 20 per year historically.
Sentiment Steps Back
The weekly sentiment survey from AAII saw a surge in optimism in recent weeks, but it took a step back this week even with the S&P 500 at new highs. Bullish sentiment fell from a recent high of 46.9% down to 39.8% this week. Outside of last week, that is still the highest level since the first week of September.
While bullish sentiment saw a significant 7.1 percentage point drop, a relatively small share of those losses turned to the bearish camp. Bearish sentiment only rose 1.6 percentage points to 29.4%. That is still below levels from two weeks ago and is in line with the average from throughout the summer.
The corresponding moves in bullish and bearish sentiment resulted in the bull-bear spread to fall but bulls continue to outweigh bears by 10.4 percentage points.
As previously mentioned, the largest share of losses to bulls did not go to bears, but instead were picked up by those reporting neutral sentiment. That reading moved back above 30% this week gaining 5.3 percentage points. Again, that does not mark any sort of new high or low but instead brings sentiment back to similar levels seen only a month or two ago.
STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending October 29th, 2021
STOCK MARKET VIDEO: ShadowTrader Video Weekly 10.31.21
Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
- ($ROKU $ETSY $QCOM $SKLZ $CVS $PINS $ABNB $PTON $SQ $NET $MELI $COIN $UBER $DKNG $CGC $ANET $Z $O $CRSR $UAA $BP $MRNA $PENN $NKLA $DDOG $AMC $APPS $ATV $ZG $LYFT $AYX $SEDG)
Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:
Monday 11.1.21 Before Market Open:
Monday 11.1.21 After Market Close:
Tuesday 11.2.21 Before Market Open:
Tuesday 11.2.21 After Market Close:
Wednesday 11.3.21 Before Market Open:
Wednesday 11.3.21 After Market Close:
Thursday 11.4.21 Before Market Open:
Thursday 11.4.21 After Market Close:
Friday 11.5.21 Before Market Open:
Friday 11.5.21 After Market Close:
Square, Inc. $254.50
Square, Inc. (SQ) is confirmed to report earnings at approximately 5:40 PM ET on Thursday, November 4, 2021. The consensus earnings estimate is $0.34 per share on revenue of $4.61 billion and the Earnings Whisper ® number is $0.51 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 3.03% with revenue increasing by 51.95%. Short interest has increased by 22.3% since the company's last earnings release while the stock has drifted higher by 2.6% from its open following the earnings release to be 5.5% above its 200 day moving average of $241.27. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, October 13, 2021 there was some notable buying of 5,171 contracts of the $240.00 call and 5,065 contracts of the $240.00 put expiring on Friday, December 17, 2021. Option traders are pricing in a 6.9% move on earnings and the stock has averaged a 8.6% move in recent quarters.
Pfizer, Inc. $43.74
Pfizer, Inc. (PFE) is confirmed to report earnings at approximately 6:45 AM ET on Tuesday, November 2, 2021. The consensus earnings estimate is $1.08 per share on revenue of $22.38 billion and the Earnings Whisper ® number is $1.19 per share. Investor sentiment going into the company's earnings release has 79% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 50.00% with revenue increasing by 84.49%. Short interest has decreased by 11.0% since the company's last earnings release while the stock has drifted higher by 3.3% from its open following the earnings release to be 9.2% above its 200 day moving average of $40.07. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, October 27, 2021 there was some notable buying of 24,016 contracts of the $43.00 call expiring on Friday, January 21, 2022. Option traders are pricing in a 5.5% move on earnings and the stock has averaged a 2.0% move in recent quarters.
Roku Inc $304.90
Roku Inc (ROKU) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, November 3, 2021. The consensus earnings estimate is $0.06 per share on revenue of $679.27 million and the Earnings Whisper ® number is $0.15 per share. Investor sentiment going into the company's earnings release has 76% expecting an earnings beat The company's guidance was for revenue of $675.00 million to $685.00 million. Consensus estimates are for earnings to decline year-over-year by 33.33% with revenue increasing by 50.39%. Short interest has increased by 27.6% since the company's last earnings release while the stock has drifted lower by 20.2% from its open following the earnings release to be 17.1% below its 200 day moving average of $367.92. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, October 28, 2021 there was some notable buying of 1,059 contracts of the $375.00 call expiring on Friday, November 19, 2021. Option traders are pricing in a 9.5% move on earnings and the stock has averaged a 7.7% move in recent quarters.
Moderna, Inc., $345.21
Moderna, Inc., (MRNA) is confirmed to report earnings at approximately 6:30 AM ET on Thursday, November 4, 2021. The consensus earnings estimate is $9.01 per share on revenue of $6.45 billion and the Earnings Whisper ® number is $9.91 per share. Investor sentiment going into the company's earnings release has 71% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 1,627.12% with revenue increasing by 3,984.61%. Short interest has increased by 8.4% since the company's last earnings release while the stock has drifted lower by 15.7% from its open following the earnings release to be 40.0% above its 200 day moving average of $246.51. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, October 19, 2021 there was some notable buying of 4,278 contracts of the $340.00 call and 4,062 contracts of the $340.00 put expiring on Friday, November 19, 2021. Option traders are pricing in a 8.2% move on earnings and the stock has averaged a 4.2% move in recent quarters.
Pinterest, Inc. $44.64
Pinterest, Inc. (PINS) is confirmed to report earnings at approximately 4:05 PM ET on Thursday, November 4, 2021. The consensus earnings estimate is $0.23 per share on revenue of $631.55 million and the Earnings Whisper ® number is $0.28 per share. Investor sentiment going into the company's earnings release has 66% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 76.92% with revenue increasing by 42.69%. Short interest has decreased by 17.1% since the company's last earnings release while the stock has drifted lower by 24.6% from its open following the earnings release to be 32.7% below its 200 day moving average of $66.37. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, October 20, 2021 there was some notable buying of 22,003 contracts of the $70.00 call expiring on Friday, November 19, 2021. Option traders are pricing in a 10.9% move on earnings and the stock has averaged a 19.3% move in recent quarters.
ON Semiconductor Corporation $48.07
ON Semiconductor Corporation (ON) is confirmed to report earnings at approximately 8:00 AM ET on Monday, November 1, 2021. The consensus earnings estimate is $0.74 per share on revenue of $1.71 billion and the Earnings Whisper ® number is $0.80 per share. Investor sentiment going into the company's earnings release has 63% expecting an earnings beat The company's guidance was for earnings of $0.68 to $0.80 per share. Consensus estimates are for year-over-year earnings growth of 174.07% with revenue increasing by 29.81%. Short interest has increased by 21.3% since the company's last earnings release while the stock has drifted higher by 12.0% from its open following the earnings release to be 17.9% above its 200 day moving average of $40.78. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, October 19, 2021 there was some notable buying of 7,501 contracts of the $45.00 call expiring on Friday, January 19, 2024. Option traders are pricing in a 8.6% move on earnings and the stock has averaged a 6.8% move in recent quarters.
DraftKings Inc. $46.59
DraftKings Inc. (DKNG) is confirmed to report earnings at approximately 7:00 AM ET on Friday, November 5, 2021. The consensus estimate is for a loss of $1.10 per share on revenue of $232.46 million and the Earnings Whisper ® number is ($1.20) per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 12.24% with revenue increasing by 75.00%. Short interest has increased by 14.7% since the company's last earnings release while the stock has drifted lower by 11.7% from its open following the earnings release to be 14.6% below its 200 day moving average of $54.53. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, October 15, 2021 there was some notable buying of 37,367 contracts of the $60.00 call and 36,163 contracts of the $40.00 put expiring on Friday, January 21, 2022. Option traders are pricing in a 7.7% move on earnings and the stock has averaged a 6.8% move in recent quarters.
Uber Technologies, Inc. $43.82
Uber Technologies, Inc. (UBER) is confirmed to report earnings at approximately 4:05 PM ET on Thursday, November 4, 2021. The consensus estimate is for a loss of $0.33 per share on revenue of $4.42 billion and the Earnings Whisper ® number is ($0.09) per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 46.77% with revenue increasing by 41.26%. Short interest has increased by 24.6% since the company's last earnings release while the stock has drifted higher by 8.2% from its open following the earnings release to be 11.8% below its 200 day moving average of $49.68. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, October 11, 2021 there was some notable buying of 28,016 contracts of the $37.50 put expiring on Friday, June 17, 2022. Option traders are pricing in a 8.3% move on earnings and the stock has averaged a 5.7% move in recent quarters.
Coinbase Global, Inc. $319.42
Coinbase Global, Inc. (COIN) is confirmed to report earnings at approximately 7:00 AM ET on Friday, November 5, 2021. The consensus earnings estimate is $1.79 per share on revenue of $1.45 billion and the Earnings Whisper ® number is $2.10 per share. Investor sentiment going into the company's earnings release has 67% expecting an earnings beat. The stock has drifted higher by 13.1% from its open following the earnings release. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, October 25, 2021 there was some notable buying of 2,661 contracts of the $460.00 call expiring on Friday, February 18, 2022. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 2.9% move in recent quarters.
Digital Turbine, Inc. $86.06
Digital Turbine, Inc. (APPS) is confirmed to report earnings at approximately 4:05 PM ET on Tuesday, November 2, 2021. The consensus earnings estimate is $0.39 per share on revenue of $306.53 million and the Earnings Whisper ® number is $0.43 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat The company's guidance was for earnings of approximately $0.38 per share on revenue of $300.00 million to $306.00 million. Consensus estimates are for year-over-year earnings growth of 178.57% with revenue increasing by 332.38%. Short interest has increased by 23.6% since the company's last earnings release while the stock has drifted higher by 29.7% from its open following the earnings release to be 21.0% above its 200 day moving average of $71.10. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, October 27, 2021 there was some notable buying of 1,045 contracts of the $65.00 put expiring on Friday, November 12, 2021. Option traders are pricing in a 12.5% move on earnings and the stock has averaged a 17.2% move in recent quarters.
DISCUSS!
What are you all watching for in this upcoming trading week?
I hope you all have a wonderful weekend and a great trading week ahead r/StockMarket. :)
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