Equity futures were marching higher as it tried to make it four straight-up sessions and nearly wipe out all of last week’s losses, states Bob Lang of ExplosiveOptions.net.
It doesn’t take much to nudge the bulls these days, and with a correction underway, it appears a move above some stiff resistance will turn that situation around quickly. Interest Rates are down at the long end of the curve as they continue their decline following the Fed policy statement. The committee kept rates steady and hinted they may be finished for this cycle but left the door open to more hikes if they do not see needed improvement in inflationary trends.
European manufacturing came mostly in line and is still in contraction mode, while Germany’s unemployment remained steady. Jamie Dimon from JP Morgan believes the Fed may not be done raising interest rates. President Biden asked for a pause in the Middle East conflict to exchange/handle hostage situations.
Solid earnings last night from Roku and ELF along with Qualcomm and MercadoLibre. AirBnB gave soft guidance while Etsy was disappointed, but Electronic Arts beat and offered decent guidance. Starbucks and Palantir with a nice beat this am, and Lilly warning about future earnings to the downside.
The Fed did its thing and as expected passed on moving interest rates. The Chairman was still hawkish and simply laid out the same strategy as the prior meetings, which was being flexible with rates. The committee still believes a higher-for-longer scenario is more than likely.
There was lousy breadth, but as the session wore on there was some improvement, especially during the Powell press conference. Rates came in and equities rallied off that move, good breadth to finish 2-1 positive.
Better volume later in the day but it was lackluster for the most part. With a jobs report coming today, we could see turnover start to come, the first day of November was pretty strong overall. QQQ and DIA registered accumulation days.
One more day of the seasonally strongest week of the year, and so far up about 3%. Not bad, and with the S&P 500 (SPX) closing well enough above 4200 yesterday we can see a run to 4,300 before a stall. The 20 ma is currently at 4,270 so that’ll be first up as strong resistance. The downside is still 4,100. The index is up against the 200 ma and well below the 50 ma, so it is still in corrective mode.
What’s it Mean?
The bears were determined to get a push down after a 2 1/2% move up early in the week but it was not to be. In the pre-market futures were lower until the refunding announcement (treasury) and it was mild, so the bulls had some running room. The VOLD started slow but finished very strong, VIX was smashed and was lower all session long. TICKS were green most of the session and very sharp move up in put/call has us a bit worried.
Learn more about Bob Lang at ExplosiveOptions.net.