MARKETS TODAY Oct 18 (Vica Partners) – The S&P 500 up 0.88% as of 1.00 p.m. Eastern. The Dow Jones Industrial Average up 288 points, or 0.95%, to 30,472. The tech based Nasdaq up 0.86%.
Stocks again opened to early morning rally following Goldman Sachs (GS) Q3 earnings beat. Goldman Sachs earned $3.1 billion, or $8.25 a share, better than the $2.8 billion, or $7.75 a share, projected by analysts. Goldman Sachs (ticker: GS). The stock is up 2.31% today after the investment bank beat earnings per share estimates.
The 10-year Treasury note yield flat at 4.021% and slowly rising. U.S. Dollar Index (DXY) up 0.12% to $112.14. Oil prices negative with Brent crude down 2.19% and US West Texas Intermediate crude down 3.11%.
The stock market statistically can’t hold extended weekly rallies and here is why…
Our most current data indicates the average equity fund manager is holding 7.1% of their portfolios in cash, the highest percentage since February 2001.
In addition….
- The markets have too many short sellers, betting against the price of a stock
- Net long positions in U.S. equity futures is near the lowest level since 2006.
Large day rally swings in the market relate to extended periods of market volatility
The S&P 500 had its third straight move of close 3% including days of gains and losses.
Most companies that are beating analyst estimates aren’t seeing stock gains
Companies that beat on both metrics are seeing their stocks drop 0.37% on average
Upside coming for oil prices
Solely based on supply and demand we see a short term 10-12% 45 day upside in WTI and Brent oil prices. Look for even larger commodity jumps in lithium, iron ore and even copper.
IMPORTANT TO READ as low interest rates will return
The Federal Reserve will be forced to cut interest rates in 2023 if a deep recession occurs as the cure for inflation is not just raising rates. As we see a significant policy change coming by late Spring of 2023 with Powell reversing direction… just look at 12 month declining lower commodity pricing and new reports on rising retail inventories.
Yearly commodity prices will rise “as there are production shortages” which include: iron, copper and crude oil. Upside will continue!
Solid strategy for these type of market days ….
We suggest investing in companies that have solid balance sheets and offer dividends.
Best to continue to cost average buy value stocks and resist most all tech and growth stocks where companies have negative margins. Our Teams forecast a negative 5-7% valuation correction for speculative stocks. DON’T try to time market lows!
*** Watch for our emerging 90 day Sector and leading company watchlist’s
*** Look to Index ETF’s like SPY to outperform stocks and most managed funds
*** Energy is the Top Performing Sector in S&P 500 Year to Date and will regain strength shortly
*** Banks will continue to profit from higher interest rates on new loans and other products
