Markets paused on light volume Monday as stocks caught their breath holding 50-day averages while struggling with overhead resistance levels and longer-term downtrends.  The tech giants garnered most of the bullish attention while the vast majority of stocks saw modest declines. Today brings us a busy day of earnings events, International Trade figures, and several Fed speakers to keep traders guessing.  Don’t be surprised if we see another choppy day of price action as we rest and wait for Jerome Powell’s comments on Wednesday morning.

While we slept China reported an export decline raising worries about consumer demand and resulting in Asian markets closing lower across the board. European markets trade modestly lower across the board this morning as worries of a slowing consumer downshift from last week’s momentum. Ahead of a busy day of earnings, trade numbers, and a parade of Fed speakers U.S. futures suggest a lower open with oil reversing Monday’s gains on consumer demand concerns.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ACMR, AHCO, APD, AKAM, AMPL, ANDE, ANGI, ARRY, AXON, BMBL, BLDP, BLUE, BHF, BCO, CARG, CAVA, CHH, CIVI, CNHI, CRSR, COTY, CPNG, DHI, DAR, DDOG, DVA, DK, DVN, BROS, EBAY, EMR, EXPD, EXR, FIS, FNF, FLW, GILD, GFS, GMED, GOGO, GPRO, GO, GXO, HRB, HAIN, IAC, IMXI, INSW, JKHY, KVYO, KKR, KD, LZ, KCID, MNKD, MLCO, MOS, NOVT, OXY, OSUR, PLNT, PINC, PRI, PGNY, RXT, RIVN, HOOD, RXO, SNBR, SQSP, TOST, UBER, VTRS, WTI, WAT, & ZBH.

News & Technicals’

WeWork, the company that provides shared office spaces and services, filed for bankruptcy on Monday, after struggling with financial losses and a failed attempt to go public. The company, which was once valued at $47 billion by SoftBank, a major investor, in 2019, saw its valuation plummet to less than $3 billion in 2020. The company faced several challenges, such as the COVID-19 pandemic, which reduced the demand for office space, as well as the controversial leadership and governance of its former CEO, Adam Neumann, who stepped down in 2019. The company disclosed in an August filing that it had “substantial doubt” about its ability to continue as a going concern. The company said it plans to restructure its debt and operations under Chapter 11 protection and hopes to emerge as a more sustainable and profitable business.

The IMF, the international organization that monitors and supports the global economy, has revised its China growth forecast for 2023 upward, from 5.1% to 5.4%. The IMF said that China’s economy performed better than expected in the third quarter of 2023 and that the recent policy measures announced by Beijing, such as the easing of credit conditions and the fiscal stimulus, would support the recovery. However, the IMF also warned that China’s growth would moderate in 2024, to 4.6%, due to the ongoing challenges in the property sector and weak external demand. The IMF said that China needs to address the structural imbalances and vulnerabilities in its economy, such as the high debt levels, the environmental issues, and the social inequalities.

The central banks of the U.S., Europe, and the U.K. have raised their interest rates significantly in the past year and a half, in an attempt to curb the high inflation that has been affecting their economies. However, they have also paused their rate hikes at their latest meetings, and the markets expect them to lower their rates by the end of 2024, despite their cautious outlooks. This suggests that the central banks are facing a dilemma between fighting inflation and supporting growth so expect further policy adjustments as economic condition data dictates.

After a strong run last week, stocks caught their breath ending Monday little changed holding 50-day averages while struggling against overhead resistance with weak volume. The so-called magnificent seven enjoyed most of the bullish attention while the majority of stocks declined slightly. However, the bond market saw some rebound, as Treasury yields clawed back some of last week’s losses as the dollar rallied slightly recovering early losses. Today investors have a full plate of earnings results to find bullish or bearish inspiration along with International Trade numbers and several Fed speaker speeches to keep an eye on.

Trade Wisely,

Doug