The data last week eased inflation fears shifting sentiment from fear to exuberance and leaving behind multiple gaps in the price action pushing index charts back up to test downtrend resistance levels.  The T2122 indicator shifted from an extremely oversold condition on Monday to a short-term overbought condition by Friday’s close.  The question for this week is, can the rally be held or will bears trigger a profit-taking wave to test support levels?  With a busy earnings calendar and a very light economic calendar this week your guess is as good as mine but plan for price volatility to remain high.

Asian markets kicked off the week green across the board with South Korea surging more than 5% after banning short selling.  However, European markets trade mixed but mostly lower seemingly resting after the huge buying spree of last week.  U.S. futures in the premarket want to keep the buying party going suggesting a modestly bullish open as earnings data rolls out kicking off another busy week.

Economic Calendar

Earnings Calendar

Notable reports for Monday include AMG, AAON, ADTN, AL, ATSG, AYX, AMK, CBT, CE, COUR, CXW, FANG, DISH, ENVO, FRPT, GT, HALO, HL, HGV, IFF, MTTR, MED, MYGN, NEO, NXPI, OLO, OPK, O, RNG, ROVR, RHP, SWAV, TALO, SKT, TDC, TRIP, VECO, VRTX, VMEO.

News & Technicals’

Berkshire Hathaway, the diversified conglomerate led by Warren Buffett, reported a strong increase in its operating earnings for the third quarter of 2023. The company earned $10.761 billion from its various businesses, up 40.6% from the same quarter last year. Berkshire also accumulated a record amount of cash, reaching $157.2 billion by the end of September. The company has been investing in short-term Treasury bills that yield at least 5%, taking advantage of the rising bond yields. Geico, Berkshire’s insurance subsidiary, posted another profitable quarter, benefiting from its low-cost strategy and loyal customer base.

Elon Musk, the visionary entrepreneur and founder of Tesla and SpaceX, has launched a new AI venture called xAI. The company’s first product is an AI chatbot technology named Grok, which is designed to learn from natural language conversations and generate engaging and intelligent responses. Grok is still in its early stages of development and is only accessible to a limited number of users who are testing its capabilities and providing feedback. Musk aims to make xAI a leading player in the AI field, competing with other companies such as OpenAI, Inflection, Anthropic, and others.

Tyson Foods, one of the largest meat producers in the U.S., is recalling about 30,000 pounds of its dinosaur-shaped chicken nuggets due to possible metal contamination. The recall affects the 29-ounce plastic bags of Fully Cooked Fun Nuggets Breaded Shaped Chicken Patties, which were distributed to retail stores nationwide. The FSIS announced the recall on Saturday after some consumers reported finding small pieces of metal in the nuggets. The FSIS said there have been no confirmed reports of adverse reactions due to consumption of the product, but advised consumers to throw away or return the product to the place of purchase.

Stocks rose on Friday, as weaker-than-expected data on jobs and services eased inflation fears and raised hopes that interest rate increases are behind us. The October jobs report showed a slowdown in hiring and wage growth, while the ISM services index indicated a slower pace of expansion in the services sector. Stocks had a strong week, with the S&P 500 gaining more than 5.5%. Small-cap stocks also did well, rising more than 2.5%. We kick off this week with a light economic calendar with a bunch of Fed speakers including Jerome Powell.  Although we’re past the tech giant reports we still have a busy week of earnings events to inspire the bulls or bears.  After a huge rally a little resting consolidation or even a pullback seems likely so be careful chasing into already extended stocks as profit takers move quickly on any hint of selling. Expect volatility to remain high.

Trade Wisely,

Doug