Pre-opening Comments for Monday October 7th
U.S. equity index futures were lower this morning. S&P 500 futures were down 22 points at 8:30 AM EDT.
Index futures responded to an escalation of the Middle East conflict. WTI Crude Oil added another $2.07 to $76.41 per barrel. Crude oil prices also were impacted by strengthening of Hurricane Milton in the Gulf of Mexico to a category #3.
Chevron added $1.84 to $152.58 after its Canadian subsidiary announced sale of its 20% interest in Canadian Oil Sands to Canadian Natural Resources for US$6.5 billion.
![clip_image002[5]](https://timingthemarket.ca/techtalk/wp-content/uploads/2024/10/clip_image0025.png "clip_image002[5]")
Apple dropped $3.06 to $223.74 after Jefferies downgraded the stock from Buy to Hold.
Amazon dropped $3.64 to $182.94 after Wells Fargo downgraded the stock
![clip_image004[6]](https://timingthemarket.ca/techtalk/wp-content/uploads/2024/10/clip_image0046.png "clip_image004[6]")
EquityClock’s Stock Market Outlook for October 7th
The larger than average rise in employment for September, manipulated by seasonal adjustments, has opened up headwinds against stocks that were not apparent previous.
See:
https://equityclock.com/2024/10/05/stock-market-outlook-for-october-7-2024/
The Bottom Line
Focus this week is on September U.S. inflation reports. Consensus calls for a slight reduction for September CPI and September PPI on a monthly basis and year-over-year basis.
Official launch of the third quarter report season starts on Friday when results by some of the biggest U.S. banks are released. As noted below, third quarter earnings by S&P 500 companies will “not be much to cheer about”. Favourable anticipation prior to release of quarterly results is expected to be muted at best. Notable concern is results from the financial sector. According to FactSet, consensus calls for a 0.4% year-over-year earnings drop by the Financial sector and a 12% earnings drop by the Bank sub-sector.
Old stock market trading folklore says “Sell Rosh Hashanah, buy Yom Kipper!” Historically, U.S. equity indices have recorded a brief downward correction during this period. This year the period is from the close on October 2nd to October 12th. Chances are high that the saying will happen again this year.
Geopolitical events are expected to continue to have an impact on selected equity markets and stocks.
- Defense stocks and related ETFs are responding to growing tensions in the Middle East and Ukraine
- Far East equity indices and commodity prices are responding to China’s efforts to reflate its economy.
Consensus for Earnings and Revenues by S&P 500 companies
Source: www.factset.com
Earnings and revenue estimates for remainder of 2024 and for 2025 were lowered slightly last week, typical just prior to start of the quarterly report season.
A word of caution! Consensus for third quarter results calls for significantly lower than the 11.3% year-over-year earnings gain recorded in the second quarter. Third quarter earnings on a year-over-year basis are expected to slip to a 4.2% increase, down from 4.6% last week. Consensus for third quarter revenues calls for a 4.7% year-over-year increase (versus a 4.8% increase last week).
Earnings and revenue gains accelerate in the fourth quarter, but at a slightly lower rate. Consensus calls for a 14.6% increase in earnings (versus a 14.9% increase last week) and a 5.1% revenue increase (versus a 5.3% increase last week).
For all of 2024, consensus calls for a 9.8% earnings increase (versus a 10.0% increase last week) and 5.0% revenue increase (versus a 5.1% increase last week).
Earnings gains accelerate in 2025, but at a slightly lower rate. First quarter earnings are expected to increase 14.0 % on a year-over-year basis (versus a 14.5% increase last week) and revenues are expected to increase 5.5% (versus a 5.7% gain last week). Second quarter earnings are expected to increase 13.3% (versus a 13.6% gain last week) and revenues are expected to increase 5.4% (versus 5.5% last week). For all of 2025 earnings are expected to increase 14.9% (versus a 15.1% increase last week) and revenues are expected to increase 5.9%.
Economic News This Week
Source: www.Investing.com
August U.S. Trade released at 8:30 AM EDT on Tuesday is expected to be a deficit of $72.3 billion versus a deficit of $78.8 billion in July.
August Canadian Trade released at 8:30 AM EDT on Tuesday is expected to be a $500 million surplus versus a $680 million surplus in July.
U.S. September Consumer Price Index released at 8:30 AM EDT on Thursday is expected to increase 0.1% versus a gain of 0.2% in August. On a year-over-year basis, September CPI is expected to increase 2.3% versus a gain of 2.5% in August. Excluding food and energy, September CPI is expected to increase 0.2% versus a 0.3% gain in August.
U.S. September Producer Price Index released at 8:30 AM EDT on Friday is expected to increase 0.1% versus a gain of 0.2% in August. Excluding food and energy, September Producer Price Index is expected to increase 0.2% versus a 0.3% gain in August.
Canadian September Employment released at 8:30 AM EDT on Friday is expected to increase 33,700 versus a 22,100 gain in August. September Unemployment Rate is expected to remain unchanged from August at 6.6%.
Michigan October Consumer Sentiment released at 10:00 AM EDT on Friday is expected to increase to 70.2 from 70.1 in September.
Selected Earnings News This Week
Source: www.Investing.com
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for October 4th 2024
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for October 4th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for October 4th 2024
Green: Increase from previous day
Red: Decrease from previous day
Changes Last Week
Links offered by valued providers
Michael Campbell’s Money Talks for October 5th
Michael Campbell’s MoneyTalks – Complete Show (mikesmoneytalks.ca)
Will China’s stimulus blitz help U.S. markets? Mark Leibovit
Will China’s Stimulus Blitz Help US Markets? – HoweStreet
Will Technology Drive S&P Higher in October? Julius de Kempaneur
Includes a discussion on seasonality
https://www.youtube.com/watch?v=yCbk55JJzNM
CHART THIS with David Keller, CMT Friday 10/4/24
https://www.youtube.com/watch?v=Eqd6NXIF9SA
Jobs Soar Past Estimates, But What Happens Next? Tom Bowley
Jobs Soar Past Estimates, But What Happens Next? | Trading Places with Tom Bowley | StockCharts.com
Does the Market Have Bad Breadth? David Keller
Does the Market Have Bad Breadth? | The Mindful Investor w/ David Keller, CMT | StockCharts.com
NASDAQ: A scenario: Wycoff Market
https://www.youtube.com/shorts/7Zl5NoYBc4s
How Realistic is the BRICS’ Proposed Gold Backed “Unit”? Bob Hoye
How Realistic is the BRICS’ Proposed Gold Backed “Unit”? – HoweStreet
Canadian Businesses Closing at an Alarming Rate: Danielle Park
Canadian Businesses Closing at an Alarming Rate – HoweStreet
Iran’s Threat To Use It’s Largest And Most Lethal Ballistic Missiles To Attack Israel Lifted The Crude Oil War Premium by US$5/b: Josef Schachter
The 2024 US Senate Map Based on the Latest Polls in EVERY KEY RACE!
https://www.youtube.com/watch?v=PywXHyFEkqY
Technical Scoop for October 7th from David Chapman and www.EnrichedInvesting.com
https://enrichedinvesting.com/library/
Chart of the Day: TSX Base Metals iShares (XBM.TO)
Technical score has improved recently to 4 thanks to a rising interest in securities that benefit from an economic recovery in China. Seasonal influences have turned positive: Buy on weakness
Technical Score
Intermediate trend: Up 2
Strength relative to S&P 500: Positive 2
Trades above its 20 day moving average: Yes 1
Daily momentum: (Stochastics, RSI, MACD): Turned lower -1
Total 4
Technical Notes for Friday
S&P Oil and Gas Exploration SPDRs $XOP moved above $137.04 and $141.38 resuming an intermediate uptrend.
Oil Services iShares $OIH moved above $299.99 extending an intermediate uptrend.
BMO Equal Weight Canadian Energy ETF $ZEO.TO moved above Cdn$74.27 to an all-time high extending an intermediate uptrend.
Silver iShares $SLV moved above $29.56 to a 10 year high extending an intermediate uptrend.
S&P 100 and NASDAQ 100 stocks moving above resistance extending an intermediate uptrend included CVS Health, Diamondback Energy, Atlassian Corp and Datadog.
S&P 100 and NASDAQ 100 stocks moving below support setting an intermediate downtrend included Coca Cola, Merck and American Tower.
S&P 500 Momentum Barometers
The intermediate term Barometer added 2.80 on Friday, but dropped 7.60 last week to 76.00. It remains Overbought.
The long term Barometer added 1.40 on Friday, but dropped 4.40 last week. It remains Overbought.
TSX Momentum Barometers
The intermediate term Barometer added 1.79 on Friday and gained 0.91 last week to 82.51. It remains Overbought. Daily uptrend was extended.
The long term Barometer added 0.90 on Friday and gained 1.79 last week to 79.82. It remains Overbought.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
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October 7th, 2024 at 2:25 pm
NVDA – Just starting to push through the top end resistance line of a symmetrical triangle that formed over the last six months or so. What makes the strong move today more interesting is that it is happening on a down day for markets. NVDA was quietly making higher lows and grinding slightly higher as it went sideways and lost the attention of market participants until now. IMO we are seeing another market rotation back into semis. I had to laugh seeing commercials on CNBC over the past month from two “expert investors” predicting NVDA’s demise inviting viewers to go to their websites for “free information”. At the moment NVDA has gone through the top end of the Bollinger Band which suggests to me that it may need to stall for a couple of days before it can go higher. RSI is not overbought yet. SMCI is another interesting one bouncing back after getting totally washed out by short sellers and allegations of accounting irregualrities.
October 7th, 2024 at 5:11 pm
Larry
I am seeing this in a number of areas (financials, industrials, telcos) where we have stalled recently and look to be consolidating for another move up. Thinking when we get out of October, there could be a very strong move upwards into Christmas given the underlying technical charts.