OCTOBER 29, 2020
STOCKS – T, SHOP, BA
MACRO- SPY, GLD, EWG, UUP
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Today we will get third quarter GDP readings with estimates for it to have risen by 31% at an annualized rate. That obviously is a huge rebound but doesn’t get us all the way to back to where we were at the end of 2019, but it gets us closer.
Stocks are attempting to rebound this morning, but so far, the attempt feels pretty weak. The S&P 500 ETF is up down about 50 bps after being up as much as 60 basis points, while the Qs are up 1%. Germany has been trying to rebound, up nearly 50 basis points at one point, but now trading flat on the day.
You can see on the chart below that the DAX is sitting on a level of support at 11,535. That is important because the next level below comes nearly 5% lower at 11,030.
S&P 500 (SPY)
The S&P 500 futures rose to around 3,300, and that is where it seemed to top out and reverse lower. It is setting up to retest the September 24 lows around 3,200. The big risk in the futures and indexes is the potential double top pattern that may be forming. Unfortunately, we will need to see the futures break 3,200 to confirm that pattern.
The dollar continues to strengthen, which makes sense, given what is happening with the virus and uncertainty around it. I think ultimately, the dollar continues to move up, heading towards 96.
That will also weigh on gold, sending the metal lower, potentially back to $1790.
Shopify will be one company to watch after blowing out quarter results, with earnings of $1.13 per share vs. estimates of $0.53 and revenue of $767.4 million vs. $663.4 million. Again great company; it just has a rich valuation, which makes it hard to buy up here, in my opinion. But I think how it trades today could give us a good feeling about the state of the market’s mood. A break of $975 will send it lower to around $850.
Boeing’s price target was cut at Credit Suisse to $74 from $84. Again as noted last night, a drop below $144 results in a further decline to around $125.
So AT&T is breaking below support at $27.35, and that could lead it on a path to $23.85.
Have a great day!
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