"market may be ripe for a period of consolidation or vulnerable to a near-term pullback."

"The US juggernaut, meanwhile, keeps rolling on - economic data are beating expectations, GDP growth is tracking well over 3%, incoming earnings are strong, and Wall Street is hitting new highs.

But perhaps the optimism is overdone. Analysts at Raymond James note that short-term options and technical indicators are getting skewed, suggesting the market may be "ripe for a period of consolidation or vulnerable to a near-term pullback."

Financial conditions are easing around the world, as central banks cut rates and stocks march higher. On that score, investors in Asia will keep close tabs on the dollar, which has recovered recently and is at a three-month high.

Key developments that could provide more direction to ASIAN markets on Monday:
China loan prime rate decision
Malaysia GDP (Q3)
Reserve Bank of Australia deputy governor Andrew Hauser speaks

We are in the earnings reporting season and the market is primarily earnings driven.  For Q3 2024 (with 14% of S&P 500 companies reporting actual results), 79% of S&P 500 companies have reported a positive EPS surprise and 64% of S&P 500 companies has reported a positive revenue surprise.........................

Edited by redfoliage2, 20 October 2024 - 05:40 PM.

We are in the earnings reporting season and the market is primarily earnings driven.  For Q3 2024 (with 14% of S&P 500 companies reporting actual results), 79% of S&P 500 companies have reported a positive EPS surprise and 64% of S&P 500 companies has reported a positive revenue surprise.........................

This is a good time for buying dips ......................

Nq long 20480

Es buy limit 5901.5

A few trades in Asian session, done for the night.

Closed nq short 20370.5

Nq short 20482

Closed es short 5887.5

Net long 1 each es, nq

Es sell limit 5907.5

"With the Atlanta Fed's real-rime "GDPNow" model indicating growth in excess of 3.4% and U.S. economic surprise index at its most positive in six months, the early Q3 earnings season is impressing again with 83% of the 71 S&P500 firms reported beating forecasts.

While the blended annual profit growth estimate for the 500 has dipped to 4% from the 5% expected pre-season, according to LSEG data, revenue growth is holding to expectations and a return to brisk double-digit earnings expansions is still forecast for next quarter and right through next year.

A heavy diary of updates this week spans industrial, defence, energy and financial sectors but Tesla's quarterly likely grabs many headlines mid-week.

Overseas, attention was back on China on Monday as the latest official lending rate cuts there were mostly expected and met with a shrug by markets. The one-year loan prime rate was lowered by 25 basis points to 3.10% from 3.35%, while the five-year LPR was cut by the same margin to 3.6% from 3.85% previously.

PLETHORA OF FED BLABBERERS!

Key developments that should provide more direction to U.S. markets later on Monday:

US corporate earnings: Nucor, WR Berkley, Alexandria Real Estate Equities

US September leading indicator

San Francisco Federal Reserve President Mary Daly, Dallas Fed President Lorie Logan, Kansas City Fed chief Jeffrey Schmid and Minneapolis Fed boss Neel Kashkari all speak
IMF-World Bank Annual Meetings get underway in Washington, with European Central Bank President Christine Lagarde speaking

US Treasury sells 3-, 6-month bills

Will open a favorite earning season trade: TESLA STRANGLE - MORE PUTS THAN CALLS

They call this market surge a "TRUMP RALLY"

FUNDSTRAT: Stocks Still Resilient But Could Get 'Trickier' Near-Term

Last week, the S&P 500 notched its sixth consecutive up week to close on Friday at a new all-time high. For Fundstrat Head of Research Tom Lee, this was more evidence of the fortitude that the market has shown in recent months: stocks have risen on numerous occasions, even after investors were given reasons to sell off. They have advanced despite higher-than-expected inflation prints, weaker jobs numbers, geopolitical turmoil, and election-related uncertainty. We also have challenging seasonality and an elevated VIX, while [the 10-year yield] is back to above 4%. Yet, the S&P 500 is rising, he noted.

As Lee previously anticipated, the dovish Fed, a recent bazooka of Chinese stimulus, and the prospects of a no-landing economy have all arguably acted as tailwinds to bolster stocks. However, in his view, the main reason for the markets resilience is cash on the sidelines. I think the resilience hints at the fact that investors are under-allocated, he explained, and I think liquidity is becoming the driver as we head into year-end. Though macro data remains important because the Fed is still watching it, for the moment I think its become secondary.

To be unambiguously clear, This doesnt mean I think stocks go up forever, Lee warned.

Thats certainly a view he shares with Head of Technical Strategy Mark Newton. I still see the broader U.S. stock market as being in good shape, with not many intermediate-term warnings, he reassured us, but in the nearer term, U.S equity trends have reached areas of resistance. Various breadth, sentiment, and cyclical-based indicators lead me to suspect that a near-term correction will happen starting at some point between now and the end of October that could result in a 5-7% correction in stock indices into mid-November before the next leg higher gets underway.

In other words, while Newton would characterize current U.S. stocks as over their skis, and perhaps in need of consolidation, he views any such pullback as a short-term correction only, not the start of a larger decline. That will likely make the road between now and mid-November a bit trickier, he admitted, but for those focused on an intermediate- or longer-term time horizon, any weakness heading into November should represent an attractive risk/reward opportunity for dip buying of U.S. stocks for a technical December rally into year-end.