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Market News

S&P 500 Momentum: Goldman Sachs’ Optimistic Stance

/ October 10, 2023

Crucial Insights for U.S. Traders: The stock market is showing signs of further gains, while bond yields are on the decline. Following a holiday break, bond markets are rallying, partially driven by increased demand for safe-haven assets in response to the recent attacks by Hamas in Israel. Additionally, two Federal Reserve officials have expressed reservations about raising interest rates, and more Fed speakers are scheduled to address the issue on Tuesday. Investors, particularly those involved in the oil market, will keep a close eye on developments in the Middle East for potential escalations. However, history has shown that Wall Street often quickly returns to its regular rhythm, especially as inflation data and the beginning of earnings season draw near. Goldman Sachs has an interesting forecast, suggesting that a significant group of momentum traders is gearing up for substantial purchases of the S&P 500 in the coming month. A chart from the bank illustrates historically low exposure to U.S. equities among commodity trading advisors (CTAs), who typically profit from bets on futures markets and tend to follow market trends. According to Goldman Sachs, CTAs currently hold a short position of approximately $90 billion in global equities, an unprecedentedly low reading. In the U.S. market alone, they maintain a record-high short position of $47 billion in equities. Goldman Sachs states, “According to our model, CTAs are now inclined to buy SPX under all possible scenarios over the next month.” This implies that those CTAs who have been selling the S&P 500 may potentially reverse their positions and become buyers if Goldman’s prediction holds true. However, it’s essential to note that not everyone advises blindly following trend-focused CTAs, as their sentiment can change suddenly. While October has a historical reputation for market volatility, it can also signal the beginning of a seasonal rebound for stocks, as noted by MarketWatch’s Mark Hulbert. Jeff Hirsch, the editor of the Stock Trader’s Almanac & Almanac Investor Newsletter, often refers to October as a “bear-killer, bargain month, and turnaround month,” characterized by robust, albeit occasionally volatile, trading. An Equity Clock seasonality chart has been circulating, potentially lending further support to the idea of buying stocks. Seth Golden, Chief Market Strategist at Finom Group, also presents a chart that could be encouraging for potential buyers. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

S&P 500 Volatility Soars as Hamas Attacks Escalate

/ October 9, 2023

Early on Monday, U.S. stock futures faced a decline due to an escalation in violence in the Middle East, impacting investor sentiment. Here’s a breakdown of how stock-index futures were performing: On the previous Friday, the Dow Jones Industrial Average (DJIA) recorded a gain of 288 points, or 0.87%, reaching 33,408. Similarly, the S&P 500 (SPX) saw an increase of 50 points, equivalent to a 1.18% rise, to 4,309. The Nasdaq Composite (COMP) gained 212 points, or 1.6%, reaching 13,431. What’s Behind the Market Movement: The global markets started the week with a risk-off sentiment as a result of Hamas’s attack on Israel, which raised concerns about the potential for a broader conflict. Richard Hunter, head of markets at Interactive Investor, noted, “Such geopolitical tension typically has a negative impact on sentiment, with investors likely to be unsettled by the prospect of increased uncertainty.” The price of Brent crude (BRN00, 3.41%), the global energy benchmark, surged nearly 4% due to concerns about potential disruptions in oil supplies from the Middle East. Jim Reid, a strategist at Deutsche Bank, pointed out, “Geopolitical risk tends not to have a lasting impact on markets, but there are many secondary effects that could emerge in the weeks, months, and even years ahead as a result of developments over the weekend.” While geopolitical concerns held the market’s attention, the upcoming week was expected to shift the focus back to monetary and corporate matters. This included the release of U.S. producer and consumer price data for September, which would provide further insights into potential actions by the Federal Reserve. Additionally, the third-quarter corporate earnings season was set to begin, featuring major banks such as JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) reporting their results. Analysts had become less optimistic about corporate profitability in recent weeks, with S&P 500 earnings expected to decline by 0.3% for the year ending in Q3 2023. While there were no U.S. economic updates scheduled for release on Monday, there were statements expected from Federal Reserve officials, including Dallas Fed President Lorie Logan and Fed Governor Philip Jefferson. Tom Lee, head of research at Fundstrat, suggested that the ongoing Middle East conflict could potentially impact the U.S. economy through reduced consumer confidence or disruptions in the global economy, potentially influencing the Federal Reserve’s policy decisions. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

S&P 500 Futures Maintain Positivity Ahead of Jobs Release

/ October 6, 2023

U.S. stock index futures saw a modest rise on Friday morning prior to the release of the September jobs report. What’s happening On Thursday, there were small decreases in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite. The Dow Jones went down by 10 points (equivalent to 0.03%) and reached a value of 33,120. Similarly, the S&P 500 decreased by 6 points (or 0.13%) and settled at 4,258. The Nasdaq Composite also saw a decline of 16 points (or 0.12%) and fell to 13,220. What’s driving markets The upcoming release of the September U.S. employment data is scheduled for 8:30 a.m. Eastern Time. According to economists, there is expected to be a rise of 170,000 job opportunities, resulting in an unemployment rate of 3.7%. This report holds importance as it is the last one to be released before the Federal Reserve announces its decision on interest rates on November 1st. According to Henry Allen, a strategist at Deutsche Bank, today’s reading is extremely important in deciding if there is still a chance of a rate increase. The probability of a rate hike has been changing between above and below 50%, with the current probability at 38% this morning. This week, the stock market experienced major ups and downs due to labor market information. At first, there was a significant drop in the market after a report showed an unexpected rise in job openings. However, it recovered when a subsequent report indicated a decrease in private sector payrolls from ADP. Later on, the market settled down once more after another disappointing report on weekly jobless benefit claims. The Wall Street Journal has reported that Exxon Mobil may purchase Pioneer Natural Resources for a staggering $60 billion. This news, along with the employment report, has the potential to influence the performance of energy stocks on Friday. Single stock movers John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

U.S. Stock Market Watch: The Effect of Trend-Following Fund Adjustments

/ October 5, 2023

Adding to the array of challenges facing the U.S. stock market, a new concern emerges: systematic trend-following funds are reducing their market exposure, potentially exacerbating downward pressure on the markets in the upcoming weeks. Goldman analysts estimate that commodity trading advisors (CTAs), a subset of trend-following hedge funds typically engaged in futures markets, shed approximately $40 billion worth of exposure to U.S. stocks last week. This rapid pace of CTA selling, according to Goldman’s data, sets a record. Fortunately, the Goldman team anticipates that the selling pressure from systematic funds will diminish in the coming days. However, not everyone shares this optimistic outlook. A team at UBS, in a recent note obtained by MarketWatch, forecasts an additional $20 billion to $30 billion in CTA selling over the next two weeks. According to their analysis, this would result in systematic funds holding a net short position on stocks for the first time since November of the previous year. The S&P 500 faced a 3.6% decline in the quarter ending in September, marking its first quarterly downturn in a year. Since then, stocks have continued to slide, with the index decreasing by another 0.5% since the beginning of October. In total, the S&P 500 has experienced a nearly 7.5% drop since its peak on July 31. By comparison, the index closed at 4,263.75 on Wednesday following a 0.8% increase, marking its most significant daily gain in three weeks, according to FactSet data. On the flip side, the Nasdaq Composite saw a 1.4% rise on Wednesday, closing at 13,236.01, while the Dow Jones Industrial Average climbed 127.17 points, or 0.4%, reaching 33,129.55. Easing Treasury yields were seen as a potential factor in this uptick, offering stocks a temporary respite. Increasing yields on Treasury bonds, particularly for longer-dated maturities, have exerted pressure on stocks, with the yields on the 10-year and 30-year Treasury bonds reaching their highest levels in 16 years earlier this week. Rising bond yields can lead to higher borrowing costs for corporations, potentially impacting economic growth, while also diminishing the appeal of U.S. equity valuations compared to bonds. For instance, these rising yields have recently driven the U.S. equity risk premium to its lowest level in over two decades, hovering just under 0.90 earlier this week, as per Dow Jones Market Data. This indicates that the compensation investors can expect for holding stocks rather than bonds is currently less attractive, at least in theory. Investors have also pointed to the lofty valuations of mega-cap technology stocks and concerns about the Federal Reserve’s plan for higher interest rates as contributing factors to the ongoing market selloff. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

S&P 500’s Support in the Face of Bond Market Pressures

/ October 4, 2023

Key Insights for Today’s U.S. Trading Session While you were away, the yield on the 30-year Treasury briefly exceeded 5% earlier today, indicating ongoing turbulence in the bond market. Influential figures in the world of finance are sounding the alarm: Amidst the stock market’s erratic performance, technical analysts are closely monitoring a critical level for the S&P 500, the focal point of our discussion today. Michael Kramer, the founder of Mott Capital Management, emphasizes the importance of the 4,200 level. He points out that it not only corresponds to the 200-day moving average (DMA) but also signifies the S&P 500’s loss of a 20% gain from its October 2022 lows. The S&P 500 closed at 4,229.45 on Tuesday, reflecting a 1.37% decline. Kramer highlights the potential for investor unease if the 200-day moving average is breached, signifying the end of the bull market. The 200-DMA is a critical indicator for many technical analysts in assessing long-term trends. Despite Tuesday’s sell-off, the S&P 500 remains 21% above its October intraday low. A 20% decline from its July 31 high would be necessary to exit the bull market. Kramer underscores the significance of the 4,200 level, both from a technical and psychological perspective. He suggests that a breach could lead to further deterioration, especially if weak job data on Friday triggers a collapse in rates. Heisenberg (@Mr_Derivatives), a commentator on the stock market, has also been discussing a pivotal moment for the S&P 500. He anticipates a visit to the 4,200 level in the near future, possibly overshooting to 4,185 to 4,190, followed by a reasonably strong rally. On a different note, Keith Lerner, the Co-Chief Investment Officer and Chief Market Strategist at Truist Advisory Services, sees an opportunity as the stock market approaches its most oversold condition since autumn 2022, particularly as it nears the 4,200 support level. He expects a temporary dip below this level, given the high number of observers. The good news is that “the percentage of stocks within the S&P 500 trading above their 50-day moving average is now below the 20% threshold considered oversold and sits at 15% currently,” according to Lerner. This suggests indiscriminate selling and historically tends to precede market rebounds, especially in stronger markets. However, the outcome will hinge on yield stabilization and the upcoming earnings season. For investors below their benchmark equity targets, there may be an opportunity to “increase equity exposure and bring weightings closer to a neutral position,” Lerner suggests. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Market News

Dollar Dominance: How It’s Affecting Stock Performance

/ October 3, 2023

U.S. Equity Futures Swing Amid Dollar’s Rally and Fed Rate Hike Concerns On Tuesday, U.S. equity futures exhibited a see-sawing performance, influenced by the surging dollar and apprehensions surrounding potential Fed interest rate hikes, along with surging Treasury bond yields. The U.S. dollar index, which gauges the greenback against six major global currencies, recorded an overnight gain of 0.13%, reaching 107.047. It crept closer to its highest levels since November of the previous year. These fluctuations followed statements from Federal Reserve officials, including Cleveland Fed President Loretta Mester, emphasizing the necessity of raising interest rates to curb inflation in the robust U.S. economy. Mester articulated, “I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred,” during a public event in Cleveland. The CME Group’s FedWatch tool currently indicates a 25.7% likelihood of a quarter-point rate hike at the conclusion of the Fed’s upcoming two-day policy meeting on November 1. The odds of a December hike, whether a quarter or half point, stand at just under 45%. Meanwhile, Treasury bond yields continued their ascent, following the most significant one-day increase in nearly a month on Monday. Benchmark 10-year notes reached a new 2007 high of 4.702%, and 2-year notes hovered just below 5.1%. These substantial upward movements, combined with the hawkish rhetoric from Fed officials, place considerable attention on this week’s job market data. Investors are eager to discern if labor market tightness will fuel inflation pressures in the final months of the year. Key economic events this week include the Bureau of Labor Statistics’ monthly jobs openings report, scheduled for release today at 10:00 am, ADP’s monthly employment report on Wednesday at 8:15 am, weekly jobless claims on Thursday at 8:30 am, and the crucial September non-farm payrolls report ahead of the opening bell on Friday. As Wall Street prepares to commence the trading day, S&P 500 futures indicate a modest 4-point gain at the opening bell, while Dow Jones Industrial Average futures suggest a 22-point uptick. Nasdaq futures show a slight 4-point increase. In international markets, the strengthening dollar has contributed to global stock market pressures, with the MSCI World index sliding 0.3% to a four-month low. The Asia ex-Japan benchmark experienced a significant 1.4% decline. In Japan, the Nikkei 225 closed 1.64% lower as the yen reached a multi-year low of 149.87 against the dollar. Japanese Finance Minister Shunichi Suzuki discussed the possibility of currency intervention. Japan resorted to purchasing yen to stabilize the currency in international markets, marking the first intervention in 24 years since it dipped below the 145 mark in September of the previous year. In Europe, the Stoxx 600 opened 0.3% lower in Frankfurt, while the FTSE 100 saw a 0.28% rise as the pound depreciated to 1.2067 against the U.S. dollar. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

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