November 6, 2023

Markets:

U.S. equity futures were slightly higher on Monday after the major averages capped their best week of the year.

All of the major averages were coming off their best weeks of the year so far, also striking a positive chord to begin November trading. The Dow ended last week up by 5.07% for its biggest weekly advance since October 2022. The S&P advanced 5.85% in that time, and the Nasdaq Composite jumped 6.6%. It was the best week since November 2022 for both indexes.

Although the week ahead will be light on economic data and company earnings, seasonal tailwinds could help further the recovery in stocks. November is the best-performing month for the S&P 500, according to the Stock Traders’ Almanac.

Earnings season is winding down, with 400 S&P 500 companies having already reported their quarterly financial results. Investors this week are still looking forward to updates this week from Walt Disney, Wynn and MGM Resorts, Occidental Petroleum and D.R. Horton.

Meanwhile, traders will also be watching Federal Reserve Chair Jerome Powell, who is scheduled to speak twice in the coming days. Last week the central bank kept rates unchanged for a second straight meeting as bond yields tumbled, and investors are hoping its rate-hiking campaign may be over.

Fed Governor Lisa D. Cook is scheduled to speak on Monday. Several other Fed officials are making public remarks later in the week as well, including New York Federal Reserve President and CEO John Williams, Atlanta Federal Reserve President Raphael Bostic, Richmond Federal Reserve President Thomas Barkin and Dallas Fed President Lorie Logan.

Portfolio:

We enter the new trading week holding setups in AI, IOT, and GEO. We will be adding this week so please be ready and on high alert. So many names are producing gorgeous pegs and charts right now. A bit more follow through and we could have an explosion of opportunity quicker than we anticipated. The absolute wild part of this monster turn thus far technically again, is the hatred it's producing and why we firmly believe how this will be the ultimate pain trade for so many. It's clear how loud folks were regarding selling the market and calling tops. This has been the pushed narrative all year and they've been chase the market top now for over 900 points to the upside on the S&P. But the ultimate pain trade would be if we clear and hold this 4500 on the S&P. The chase / opportunity would be massive, and we do believe it's building towards that. Still in the early stages, needs more follow through, but could be epic. For our chart enthusiasts, I think you would agree it would be a bit healthier if we tested 4325 area on the S&P before moving higher. At times, when you have a strong reversal, it gives you very little time to adjust. Just keep all your options open and do not get caught in any camp of bull / bear right now. Can have a narrative / theory but need to remain nimble / respectful to the trend / trade itself. Let's have a monster week ahead!