| |
|
This Week on Wall Street
|
|
|
| The week opens with a vote and closes with a jobs report. Voters go to the polls Tuesday, with all 435 House seats, 35 Senate seats and 36 governorships on the ballot and narrow Republican majorities in both chambers at stake. For markets the arithmetic matters more than the party, because the size of each majority shapes what tax and spending legislation can move over the next two years. Results in the closest Senate races may not be settled Tuesday night. Earnings run alongside it. Apple and Palantir report after the close today, AMD and Pfizer on Tuesday and Moderna on Friday. The live thread outside the calendar is in Doha, where Iranian and Qatari negotiators spent the weekend on a proposal that would reopen the Strait of Hormuz. Crude fell Monday morning on that news, after reaching its highest levels in five months last week. Global inventories have drained by close to a billion barrels since the waterway was disrupted in February, which leaves the question for energy prices resting less on production targets than on whether tankers can move. OPEC+ left December output unchanged over the weekend and pushed its 2027 decision to a meeting at the end of this month. |
| Labor data arrives on almost every day of this week, and Friday's October employment report is the one that counts, with consensus looking for payrolls near 55,000 after a weak September and the unemployment rate expected to hold steady. Four readings land ahead of it. Manufacturing activity this morning and services activity Wednesday each carry an employment component, job openings Tuesday show how much demand for workers is left, and the private payroll count Wednesday offers a preview of the Friday number. Jobless claims follow Thursday. Together they are the last broad look at hiring before the Fed meets on December 8 and 9, which is why the week carries the weight it does. Inflation has stayed above target while hiring has slowed, the committee split for the first time since it began tightening in September, and futures now price a December increase at roughly 85%. Friday is where that pricing meets the data. |
| The market has been broadening, and the chart below measures how far. Nine of the eleven sectors finished last week higher even as the broad index fell. Money has been moving toward parts of the market that spent the past three years in the shade, and those areas have been rewarded for the attention. The catch is arithmetic. A handful of AI-linked names carry enough index weight to pull the average down on a day when most of the market rises, so improving breadth underneath does not change which group sets the direction of the headline number. Volatility has registered the same split. Friday brought a broad decline in the major averages, yet the volatility index closed near 19, a smaller response than drops of that size have usually produced, and one-day options pricing jumped while longer-dated measures barely moved. An index travels less than its components when the selling gathers in one corner, which is the arithmetic behind a choppy tape. |
|
The S&P 500 Without Its AI Names
|
|
| Measured month by month, the S&P 500 excluding AI-linked names outpaced the full index by roughly six percentage points in October, the widest margin in favor of the ex-AI index in the series. The same measure ran a shortfall of similar size over the summer, so the swing has gone both ways this year. |
| Source: Bloomberg |
|
Economic Releases This Week
|
| Monday |
ISM Manufacturing |
| Tuesday |
Job Openings (JOLTS) |
| Wednesday |
ADP Employment, ISM Services |
| Thursday |
Initial Jobless Claims |
| Friday |
Jobs Report |
|
|
Stories to Start the Week
|
|
|
|
What is Newton?
|
|
Our Newton model determines the highest probability of future price direction using advanced algorithmic and high-order mathematical techniques on the current market environment. It scores securities over multiple time periods on a 0–20 scale (0 worst, 20 best). Trend and level both matter. A name moving from 18 to 16 still signals a strong level, with slight exhaustion in the trend.
▼ 0–8 declining
▬ 9–13 neutral
▲ 14–20 strong
|
| Equities |
Trend |
This Wk |
Last Wk |
| Small Cap |
▬ |
12 |
9 |
| Mid Cap |
▬ |
11 |
13 |
| Foreign Developed |
▬ |
10 |
16 |
| Large Cap |
▬ |
9 |
11 |
| Emerging Markets |
▼ |
5 |
5 |
|
| Fixed Income |
Trend |
This Wk |
Last Wk |
| Floating Rate Bond |
▬ |
13 |
11 |
| Long-Term Bond |
▬ |
13 |
8 |
| Intermediate Term Bond |
▬ |
13 |
5 |
| Corporate Bond |
▬ |
11 |
7 |
| Short Term Bond |
▬ |
10 |
7 |
| High Yield Bond |
▬ |
10 |
6 |
|
| Sectors |
Trend |
This Wk |
Last Wk |
| Health Care |
▲ |
14 |
18 |
| Financials |
▲ |
14 |
14 |
| Energy |
▲ |
14 |
11 |
| Real Estate |
▲ |
14 |
9 |
| Materials |
▬ |
11 |
9 |
| Utilities |
▬ |
10 |
5 |
| Consumer Defensive |
▬ |
9 |
12 |
| Consumer Cyclical |
▼ |
8 |
12 |
| Technology |
▼ |
7 |
10 |
| Communications |
▼ |
5 |
9 |
| Industrials |
▼ |
4 |
5 |
|
| Market Segments |
Trend |
This Wk |
Last Wk |
| Large Value |
▲ |
17 |
18 |
| Mid-Cap Value |
▲ |
17 |
12 |
| Small Value |
▲ |
14 |
14 |
| Small Growth |
▬ |
9 |
9 |
| Large Growth |
▼ |
6 |
6 |
| Mid-Cap Growth |
▼ |
4 |
8 |
|
|
Notable Newton Moves This Week: Fixed income carried the week, with every bond category improving and Intermediate Term Bond jumping 5 to 13, Long-Term Bond 8 to 13 and High Yield Bond 6 to 10. Equity reads moved the other way, as Small Cap at 9 to 12 was the only gain and Foreign Developed fell hardest at 16 to 10. Sectors split, with Real Estate climbing 9 to 14 and Utilities 5 to 10, against Communications at 9 to 5, Consumer Cyclical at 12 to 8 and Technology at 10 to 7. Value held the top of the board, Mid-Cap Value rising 12 to 17 to sit alongside Large Value, while Mid-Cap Growth slid 8 to 4 at the other end.
|
|
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.
Disclosure: Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results. This newsletter is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Waterloo Capital to be reliable. The letter may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecast made will materialize. Reliance upon information in this letter is at sole discretion of the reader. Please consult with a Waterloo Capital financial advisor to ensure that any contemplated transaction in any securities or investment strategy mentioned in this newsletter aligns with your overall investment goals, objectives and tolerance for risk. Additional information about Waterloo Capital is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary report which are accessible online via the SEC's Investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 133705. Waterloo Capital is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.
|
|