Tuesday, October 18, 2022

🐻Two Reasons Why Another Bear Market Bounce Is Underway

Good morning. Until central banks stop raising interest rates, asset prices will be under...
It's the monthly jobs numbers today and they're not going to be pretty and will be possibly the tip of the iceberg as we head into May.

Good morning. Until central banks stop raising interest rates, asset prices will be under pressure. Investors should expect an overall downtrend. However, there are a few short-term signs that a bounce is likely. The first is a delta squeeze. The ratio of selling to buying has been far out of whack, enough that a rebalancing will likely set up for a move higher, which started yesterday.

The second is that companies are locked up from buying back shares ahead of their quarterly earnings reports. As companies report, they can resume their buyback operations. That's been a huge part of market returns in the past few years, and one that may give markets a boost in the coming day and weeks.

That gives traders a few more short-term opportunities on the long side. But look for a few inexpensive ways to bet on the market resuming its longer-term downtrend in the weeks ahead.

Now here's the rest of the news:

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MARKETS
DOW 30,185.82 +1.86%
S&P 3,677.95 +2.65%
NASDAQ 10,675.80 +3.43%
*As of market close
Stocks jumped higher on Monday, reversing Friday's losses.
Oil dipped 0.3 percent, closing at $85.40 per barrel.
Gold rose 0.3 percent, last going for about $1,653 per ounce.
Cryptocurrencies trended higher, with Bitcoin at $19,534 at the stock market close.

Today's TOP TIPS
For Better Investment Results, Capitalize on Multiple Fears
Markets are always bothered by something. That can lead to short-term opportunities that disappear when the fear does. That can include anything from a war to the current fears over how long the Fed will raise interest rates.

Looking at a long-term chart of the stock market, it's clear that fears pass, even if they're later replaced with new ones when stocks have moved higher.  Today, investors may see better returns from companies that are playing to multiple fears.

» FULL STORY

Insider Trading Report: Enviva Inc (EVA)
Thomas Meth, president of Enviva Inc (EVA), recently added 5,000 shares. The buy increased his holdings by 1.2 percent, and came to a total cost of just over $254,000.

He was joined by the company Chairman and CEO, who bought 4,943 shares, for about $250,000, and a company EVP also made a similar buy at the same time. At the same time, a company director made a whopping 200,000 share buy, for about $10.1 million.

» FULL STORY

Unusual Options Activity: Philip Morris International (PM)
Shares of tobacco product company Philip Morris International (PM) are down about 11 percent over the past year. One trader sees a rebound in the coming weeks.

That's based off of the November 18 $90 calls. With 31 days until expiration, 10,359 contracts traded compared to a prior open interest of 626, for a 17-fold rise in volume on the trade. The buyer of the calls paid $1.42 to make a bet on the option.

» FULL STORY

IN OTHER NEWS
Bank of America Reports Consumers Remain Strong

Bank of America (BAC) reports that their customers have 10 percent more transaction volume for September compared to a year ago. Plus, bank balances remain higher on average than before the outbreak of Covid 19. That suggests that consumers are in a strong place, which may also mean that it will take more for the economy to slow.
Housing Slowdown Showing in Bank Earnings

As banks have reported earnings this season, housing has shown notable signs of slowing down. Many banks are seeing mortgage demand drop amid rising interest rates, and that overall mortgage loan growth is moderating. And with housing prices down for a seventh month in a row, a further drop is expected to impact banks into the fourth quarter.
UK Reverses Tax Plans

After the bond market revolted against plans in the United Kingdom to cut taxes, the new Treasury Chief has reversed those proposals. That's helped to reassure the markets, and should shore up the country's finances in a way that bond investors approve of.
Goldman To Merge Businesses

Goldman Sachs (GS) is looking to combine its investment banking and trading businesses into a single unit, and also to merge its asset and wealth management into another. That would create one of the largest reorganizations in the company's history, and could spur other major Wall Street banks to similarly reshuffle.
Kanye To Buy Parler

Kanye West, also known as Ye, has reached an agreement to buy Parler. The social media platform has branded itself as "uncancellable." No terms of the deal were disclosed, other than that it is expected to close sometime this quarter. West has recently had posts banned on sites like Instagram and Twitter.

S&P 500 MOVERS
TOP
MELI 11.545%
CDAY 8.332%
DISH 7.678%
CZR 7.218%
NFLX 7.105%
BOTTOM
FOXA 9.905%
FOX 8.488%
SCHW 3.015%
KR 2.363%
CI 1.771%

Quote of the Day
With core CPI still moving in the wrong direction and the labor market strong, the conditions are not in place for a Fed policy pivot, which would be one of the conditions for a sustained rally in the equity market. Moreover, as inflation remains elevated for longer and the Fed hikes further, the risk increases that the cumulative effect of policy tightening pushes the US economy into recession, undermining the outlook for corporate earnings.
- Mark Haefele, UBS global wealth management chief investment officer, on why interest rates will continue to rise for some time, and why such a move could further lead to lower shares on even worse economic conditions.

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