Although this earnings season has produced new record highs and much better than expected company profits, Jerome Powell suggested in his testimony yesterday that more government economic intervention may be necessary.  With COIVD-19 cases once again on the rise and the national death toll in the US setting a world record of more than 200,000, the path ahead is definitely uncertain.  The US House yesterday passed a spending bill that will prevent a government shutdown if approved by the Senate and signed by the President. Still, as the election looms, political tensions hit a fevered pitch, and the market is understandably concerned about what lies ahead.

Asian markets closed the day mostly higher with Australia leading the gains up more than 2%.  European markets are seeing substantial gains this morning ahead of important euro-zone data.  US Futures also point to significant gains at the open but be careful chasing the moring pop as we approach the downtrend and the price resistance above. 

Economic Calendar

Earnings Calendar

On the hump day Earnings Calendar, we have just 12 companies reporting quarterly results.  Notable reports include CTAS, GIS, JKS, & WOR.

News & Technicals’

Breaking a 4-day selling streak, big tech lead a modest relief rally in an otherwise choppy price action day as the indexes grind toward the resistance.  After the bell, NKE reported blowout earnings substantially beating expectations and indicating about 12% this morning.  The US House passed a spending bill sending it to the Senate for approval to avoid a government shutdown if approved and signed by the President.  Sadly, the US has set another grim record in its battle with COVID-19 with a world record death toll that now tops 200,000.  Parts of Europe are back under lockdown restrictions, and infection numbers here in the US are once again on the rise, with several states reporting their highest number of infections to date.  Without a doubt, the pandemic continues to upend American life, and unfortunately, if numbers continue to rise, the damage to the economy is likely to much worse.  With an average daily death toll around 800, it seems we have a long way to go if we are to defeat this microscopic enemy.

On the technical front, all four indexes remain in downtrends and below price resistance levels.  Jerome Powell, in his testimony, suggested more government stimulus may be necessary to curb the economic damage of unemployment. However, Larry Kudlow, US Economic Council, later in the day, indicated that additional incentives are not required.  No matter what you believe, there remains a tremendous uncertainty for the market to digest in the week and months ahead.  This morning futures point to a bullish open but be careful rushing in with a fear of missing out as the indexes approach resistance.

Trade Wisely,

Doug