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US Earnings – The key week ahead

Market Analysis

USA500, Daily

U.S. equities resumed their rally after Abe’s reelection in Japan as PM boosted the Nikkei 1.11%, though the HK Hang Seng sank 0.64% and China’s CSI 300 gained only 0.1%. Europe is mildly higher itself with the Euro Stoxx 50 +0.28%, though Spain’s IBEX is 0.35% lower as Catalonia prepares to respond to Madrid’s effort to take over governance of the renegade region. The Chicago Fed index rose 0.17 in September vs a -0.37 fall, though the third tier data didn’t have any significant impact. The USA30 is 31-points higher, and the key USA500 gained 2-points  Earnings will continue to flood out with a very meaty week of results. Indeed 189 of the USA 500 and 12 of the USA30 companies, report earnings this week. Top of the shop are technology heavy weights Amazon and Alphabet. Momentum has continued to swing back towards tax cuts in the wake of the Senate budget resolution last week, while Trump winnowed his Fed chair short-list down to three last week and plans to make the decision “shortly,” while he also said there would be no change to 401(k) plans in the tax plan. The dollar index is up 0.12% to the key  94.00 area after the Abe election, while gold is back below $1,275 in risk-on trade.

Technically, the USA500, is screaming overbought with an RSI at 83.00 and rising, but know one appears to be interested, and its been over the important  70 for the last 3 weeks.  2580 I mentioned at the beginning of the quarter as its first resistance level, with 2630 representing a 5% rise for the fourth quarter, not unheard of in such bullish heady markets. Buyer beware, the behemoth that is  APPLE report November 2nd the same day as the iPhone X goes on sale.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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