Election Season: Hold Calm and Optimize Your Portfolio | ChartWatchers

Though earnings season is in full swing, buying and selling quantity has been comparatively gentle this week. Maybe buyers are ready for the inventory market to point out some path. It may occur subsequent week, one which’s jampacked with earnings and market-moving financial knowledge, or the next week after the US election and Fed assembly.

A Hen’s-Eye View Of the Inventory Market

Tesla’s upbeat Q3 earnings on Thursday juiced up the Nasdaq Composite ($COMPQ), the laggard of the three US broad market indexes. This value motion continued into Friday, with the Nasdaq reaching a document excessive. Sadly, it could not maintain on to it, however nonetheless managed to shut larger by 0.56%. The S&P 500 ($SPX) and Dow Jones ($INDU) snapped their six-week profitable streak, however the Nasdaq retained its seven-week profitable streak.

Know-how was the top-performing sector on Friday, adopted by Shopper Discretionary and Communication Providers (see the StockCharts MarketCarpets screenshot beneath). It regarded just like the inventory market had regained its mojo for a short while, however the week ended with out giving buyers a lot of a way of path. Subsequent week could possibly be a distinct story, since most mega-cap Tech shares will report quarterly earnings.

FIGURE 1. STOCKCHARTS MARKETCARPET, OCTOBER 25, 2024. Know-how regained its high spot in sector efficiency on Friday. Subsequent week is an enormous earnings week for expertise corporations. Will they impress or disappoint?Picture supply: StockCharts.com. For academic functions.

The US greenback and treasured metals traded larger this week. The ten-year US Treasury Yield Index ($TNX) bounced off its 200-day easy shifting common and closed at 4.23% (see every day chart of $TNX beneath).

FIGURE 2. DAILY CHART OF 10-YEAR US TREASURY YIELD INDEX ($TNX). $TNX bounced off the 200-day shifting common and moved larger. The rise in yields suggests buyers are unsure about near-term market path.Chart supply: StockCharts.com. For academic functions.

Seeing gold, the US greenback, and Treasury yields rally concurrently is uncommon and is a sign of investor uncertainty. To this point, the three appear to be holding on to their uptrends. At any time when there is a slight pullback, they recuperate shortly and transfer larger, suggesting that these property have momentum behind them. The chart beneath shows the US greenback ($USD), SPDR Gold Shares ETF (GLD), and $TNX.

FIGURE 3. THE US DOLLAR, GOLD, AND YIELDS. Gold has been trending larger in 2024, whereas the US greenback and yields nonetheless show a sequence of decrease highs and decrease lows.Chart supply: StockChartsACP. for academic functions.

Though the US greenback and 10-year yields are rising, they have not but established an uptrend. Gold, then again, has been on an upward pattern in 2024. 

When you maintain a protracted place in gold, experience the momentum, however know that it may dry up. It is a good suggestion to begin fascinated about managing your place. Gold costs are wanting prolonged, and with Treasury yields and the US greenback as excessive as they’re, I’d watch them intently for a reversal, because it may trigger gold costs to fall.

Trying Ahead

Subsequent week, we can have some key financial knowledge that would affect the Fed’s rate of interest determination at their November 7 assembly. In line with the CME FedWatch Instrument, a 25 foundation level reduce likelihood is 95.5%. This might change as financial knowledge is available in subsequent week. If the information helps a strengthening US financial system, buyers might imagine the Fed won’t reduce charges on the subsequent assembly. This might give rise to concern, which in flip spikes volatility.

The Cboe Volatility Index ($VIX) closed larger, however continues to be comparatively low at 20.33. Control it, as a result of even a bit of damaging information may ship it larger.

Subsequent week is chock stuffed with market-moving occasions. Earnings from mega-cap Tech and different large-cap corporations, plus key financial knowledge (see the Finish-of-Week Wrap-Up part beneath), are amongst them. If buying and selling volatility stays anemic subsequent week, then you realize that buyers are having the election jitters. You will have to attend one other week for buying and selling quantity to select up.

Within the meantime, it is best to train endurance and focus extra on managing your portfolio holdings. If you’ll add positions, maintain your sizes small to reduce your dangers. The inventory market is weak and will make giant strikes in both path.

Finish-of-Week Wrap-Up

• S&P 500 closed down 0.96% for the week, at 5808.12, Dow Jones Industrial Common down 2.68% for the week at 42,114.40; Nasdaq Composite closed up 0.16% for the week at 18,690.01
• $VIX up 12.76% for the week, closing at 20.33
• Greatest performing sector for the week: Shopper Discretionary
• Worst performing sector for the week: Supplies
• Prime 5 Massive Cap SCTR shares: Applovin Corp. (APP); Carvana (CVNA); Insmed Inc. (INSM); Ubiquiti, Inc. (UI); MicroStrategy, Inc. (MSTR)

On the Radar Subsequent Week

• September JOLTS Report
• Q3 GDP Development Charge QoQ Adv
• September PCE Value Index
• October Jobs Report
• October ISM Manufacturing PMI
• Earnings from Alphabet (GOOGL), AMD, Microsoft (MSFT), Meta Platforms (META), Amazon, Inc. (AMZN), Apple Inc. (AAPL), McDonald’s Corp (MCD), Pfizer, Inc. (PFE), Chipotle Mexican Grill (CMG), D.R. Horton, Inc. (DHI), Microstrategy (MSTR), Carvana (CVNA), and lots of extra.

Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.