The Nasdaq index enters correction mode, the Dow hits its 200-day moving average in volatile Friday trading
If there is any doubt as to whether the market entering the general election is “risky” or “risky,” Friday’s sell-off almost freezes it. The conversion has been turned off. Last week’s collapse was ignited after gains in four of the five FAANGs, which were mostly positive but may lack guidance departments (see below). Coupled with the rise of COVID-1
9, the adjournment of the Senate, the lack of stimulus package, and the arrival of a long and controversial election season, it is no wonder that investors seem ready to take a break. Even before the FAANG’s income was officially frozen, many investors showed signs of risk aversion before the election. This was evident in the selling on Monday and Wednesday. The main index suffered its worst week since March, and people are now publicly comparing the landslide before this election with the landslide we have seen that will enter the 2016 election. This morning, please pay attention to the futures from Sunday night to Monday, especially Tuesday night, as the income comes. Election night is a crazy scene for the futures market. When it seems that the result may be questioned at first, it will drop sharply, and then when it becomes clear that there is a winner, there will be a skyrocket. If things look irritable before Tuesday night, it may be crazy this time. Or, if it seems relatively stable, inventory may be boosted. It can be said that not so many have won, but is it possible to have a long and long chaotic battle for the winner. The strong recovery efforts at the end of the Fed’s new policy meeting on Friday may make Monday’s trading more stable. 40 minutes before the close, the latest Fed news may also be the reason for the late rebound. The Fed said it is reducing the minimum loan size for small businesses that want to use the Fed’s loan program. For companies that already use the program, this also eases debt restrictions. The Fed called these moves “two important ways to provide better support to small businesses that support millions of workers, who are facing persistent income shortages due to the pandemic.” Basically, the Fed is trying to Injecting more funds into the economy is an initiative of Congress. Since the spring, the White House has not taken stimulus measures, which may increase economic growth expectations. The idea might be that this might help small businesses bridge the gap between now and any fiscal stimulus measures. The strong data sparked hope for the new week. Once the enthusiasm for the election fades, other signs may improve. Economic data has been stable recently. Yesterday’s gross domestic product (GDP) in the third quarter was higher than expected, and the initial unemployment benefits finally began to ease. Sales of new homes weakened in September, but this was the only data below average for the entire week. The problem is that the good news is surrounding the election, COVID-19 and the lack of stimulus measures. Before we leave these behind (it may take a while), the market risk premium may continue to collapse as we saw this week. Technically speaking, a lot of damage was done on the chart this week. The Dow Jones Industrial Average ($DJI) retested the 200-day moving average (before the breakout, see the table below), while SPX took out the 50-day and 100-day moving averages. There seems to be potential technical support near the SPX 200-day moving average 3130, but this still has a long way to go, so if the situation falls further, it may look for bulls to defend the 3200 psychological barrier. , Nasdaq (COMP) has fallen 10% from its historical high. SPX has fallen 8.7% from the highest point, so although it is close, it is not all the way into the correction zone. The Dow Jones Industrial Average (DJI Candlestick) retested its 200-day moving average (blue line) and closed above it. This is the level of the index’s return visits in June and August (yellow circles), so it may be a key level worthy of attention. Data source: S&P Dow Jones Indices. Chart source: TD Ameritrade’s thinkorswim® platform. For illustration purposes only. Past performance does not guarantee future results. A roadmap lacking guidance In addition to viruses and elections, one more thing is that certain ideas may “catalyze” (is this a word?) The Wall Street downturn is the profitable season, which is about half. As usual, media headlines have reduced the number of companies that “exceed” Wall Street expectations to zero. So far, this ratio is about 85%, but this may not be the best way to judge. This is because analysts’ forecasts for this quarter are too conservative, so that beating them is like your child winning the participation trophy. Investors are becoming more and more wise about this. As you saw from some companies such as Microsoft (NASDAQ: MSFT) this week, despite poor performance, they have been punished for poor guidance. Many companies, including Apple Inc. (NASAQ: AAPL), still insist on and refuse to provide guidance. Some people mentioned “uncertainty”, although no quarter was “definite” even before COVID-19 appeared. Lack of guidance is likely to be one of the factors that prevents stocks from boosting earnings as usual. In addition to the major companies that AAPL recently reported but did not share guidance, General Electric (NYSE: GE), Caterpillar (NYSE: CAT), 3M (NYSE: MMM), Xerox Holdings (NYSE: XRX), Raytheon Corporation (RTN) and United Parcel Service (NYSE: UPS). Knowing what happened last quarter, but not getting the forecast for this quarter will leave investors with nowhere to go. FAANGs at a glance. The four companies reported that FAANG’s earnings are good from the bottom line and the top line, and there are no major mistakes. However, it seems that for all companies except Alphabet Inc. (NASDAQ: GOOGL), the pre-revenue boom has been elevated a bit, because the decline in revenue is less than the level of revenue below the surface. Driven by Facebook, Inc. (NASDAQ: FB), investors’ spending in the third quarter exceeded expectations. With AAPL, it’s disappointing that iPhone sales failed to meet Wall Street’s expectations. It’s hard to find really unflattering things about Amazon.com, Inc. (NASDAQ: AMZN) performance, but that stock may suffer A little profit ended. As customers wait for new 5G products, it may actually end up being a ride for APL to enter the December and March quarters. This is because some people who were waiting to replace their phones may start to do so this quarter. Therefore, AAPL did not pull demand in the early stages of the pandemic like many high-tech companies did, but “push back” demand. As this week’s disappointing week is coming to an end, almost every S&P industry has fallen, but no company has been punished more severely than technology companies. It was down 2.1% on Friday, and it was down 2% from the previous month. Investors may not be accustomed to high-tech being defensive in this way, but given the high value of the industry entering the election season, it is not surprising to see that the premium is higher than other industries. On Friday, an asset class that runs counter to grain is the bond market. The pressure on US Treasuries caused the 10-year Treasury yield to rise to a four-month high above 0.87%. The third quarter GDP data may increase yields, but it may also reflect the same type of position balance we see in stocks today. People are inclined to the long-term trend of the bond market this week, but don’t want to enter the weekend, because today’s Cboe Volatility Index (VIX) reacted rather coldly because it did not do so. Rise above the psychological 40 level. Maybe the level of attention to the election is not as great as people initially thought, or it may reflect that people left their positions before the weekend. A quick glance at the data calendar for next week is onerous, including construction expenditures, October car sales, factory orders and Friday. The October salary report is the last time, but it may be the first time. From a revenue point of view, many fireworks have ended, but there will be no holidays next week. It is expected that the reporting companies in the next few days will include PayPal Holdings Inc (NASDAQ: PYPL), Allstate Corp (NYSE: ALL), General Motors Company (NYSE: GM), Kohl’s Corporation (New York) Stock exchange: KSS), CVS Health Corp (New York Stock Exchange: CVS), Marriott International (NASDAQ: MAR) and Norwegian Cruise Line (NYSE: NCLH). As the United States and Europe are fending off this new wave of virus cases, the latter two may be important for monitoring travel demand updates. TDAmeritrade® reviews are for educational purposes only. SIPC member, Luca Bravo filmed on Unsplash. 2020 (C) After the transaction ends, revenue from Amazon, Alphabet and Facebook awaits Benzinga.com. Benzinga does not provide investment advice. all rights reserved.