Weekly Trader's Outlook

If you read last week's blog you might recall that my forecast for this was "moderately bearish," citing an unusual rise in the VIX and a cautious technical outlook on the PHLX Semiconductor index (SOX). At the time of this writing (1:00 p.m. ET) the S&P 500 (SPX) is on track to be down 2.7% and the SOX is on track to be down more than 6%. Additionally, the VIX is up 25% on the week, currently at a two-week high of 21.82. What was the cause of the bearish week? It's tough to pinpoint one particular catalyst, I think it's been more of a culmination of events. Last Wednesday META sold off on plans to significantly increase CapEx in 2026, then Federal Reserve Chairman Jerome Powell cast doubt on the possibility of a December rate cut, and then the VIX started to push higher starting last Friday. The VIX continued to show some relative strength on Monday and that same day, the post-earnings sell-off in AI-darling Palantir, despite a strong beat-and-raise quarter, begin to call into question lofty valuations in tech stocks. The government shutdown, which has been the longest in history, appears to be denting consumer confidence and there has been more signs of softness in the labor market (more on this in the "Economic Data, Rates & the Fed" section below). Lastly, market breadth has been deteriorating over the past two weeks which suggests weaker member participation, and a less "healthy" uptrend.

From a bullish perspective, the Atlanta Fed revised their Q3 GDP "Nowcast" to 4.0% from 3.9% and Q3 earnings have been strong. Roughly 90% of the S&P 500 companies have reported results and so far, 67% have beat on the top line while 82% have beat on the bottom line. Revenue growth has been 8.19% and EPS growth has been 11.75% thus far.

At the time of this writing (1:45 p.m. ET), stocks are in the red, but off the lows of the day (DJI - 192, SPX - 43, COMPX - 268). While the Cboe Volatility Index is still holding ground above the 20 level (VIX + 1.32 to 20.82), the SPX appears to be moving back above its 50-day SMA at the time of this writing (SPX 6,680 vs. 50-day SMA @ 6,668). On the one hand, given this week's 3.5% drop in the Nasdaq Composite and 6% drop in the SOX, one could argue that stocks are near-term oversold. On the other hand, if support doesn't hold up at the 50-day SMA for the SPX, this could suggest some more downside price discovery is needed before stabilization. I understand that I am putting a lot of emphasis on the technicals, but keep in mind that today is the first time the SPX has been below its 50-day SMA since April. Additionally, this is a weekly blog and technicals generally have more importance on shorter timeframes. I feel like today could mark a bit of an inflection point for near-term price direction—if the SPX can establish support at its 50-day SMA, either by closing above this indicator today or moving above it on Monday, then this could help embolden dip buying behavior, at least on a near-term basis. However, if not, I think this could foster more profit taking in higher valued areas of the market and stocks could experience additional downside. Lastly, the pressure around the government shutdown continues to build, which could push votes closer to a resolution. If a funding gap can be passed, this could provide an excuse for investors to "buy the dip" in stocks. Therefore, my forecast for next week is for "breakout." I define "breakout" as a 1.5% or greater move in the S&P 500 from today's close, either higher or lower, by next Friday. What could challenge my forecast? For this type of a forecast, the SPX could moved down in the first half of the week and then back up, or vice versa, bringing the net gain or loss within the 1.5% band that I defined above.

• Monday (Nov. 10): no reports
• Tuesday (Nov. 11): no reports
• Wednesday (Nov. 12): EIA Crude Oil Inventories, MBA Mortgage Applications Index
• Thursday (Nov. 13): Continuing Claims, Consumer Price Index (CPI), EIA Natural Gas Inventories, Initial Claims, Treasury Budget
• Friday (Nov. 14): Business Inventories, Producer Price Index (PPI), Retail Sales

• Monday (Nov. 10): ASTS SpaceMobile Inc. (ASTS), Barrick Mining Corp. (B), CoreWeave Inc. (CRWV), Occidental Petroleum Corp. (OXY), Rigetti Computing Inc. (RGTI), Rocket Lab Corp. (RKLB), Tyson Foods Inc. (TSN), Venture Global Inc. (VG)
• Tuesday (Nov. 11): Amdocs Ltd. (DOX), Anglogold Ashanti PLC (AU), Beyond Meat Inc. (BYND), CAE Inc. (CAE), Camtek Ltd. (CAMT), Nebius Group NV (NBIS), Oklo Inc. (OKLO), Sea Ltd. (SE), Sony Group Corp. (SNY)
• Wednesday (Nov. 12): Circle Internet Group Inc. (CRCL), Cisco Systems Inc. (CSCO), Flutter Entertainment PLC (FLUT), Globalfoundries Inc. (GFS), Manulife Financial Corp. (MFC), ON Holdings AG (ONON), Pan America Silver Corp. (PAAS), TransDigm Group Inc. (TDG), Tencent Music Entertainment Group (TME)
• Thursday (Nov. 13): Applied Materials Inc. (AMAT), Bilibili Inc. (BILI), Brookfield Corp. (BN), Credicorp Ltd. (BAP), Dillard's Inc. (DDS), Ecopetrol SA (EC), JD.com (JD), NetEase Inc. (NTES), Walt Disney Co. (DIS)
• Friday (Nov. 14): Alibaba Group Holding Ltd. (BABA), LATAM Airlines Group SA (LTM), Legence Corp. (LGN), RLX Technologies Inc. (RLX), Spire Inc. (SR)

Once again, economic data was restricted this week due to the continued government shutdown, and the data had some soft spots. While the ADP report came in above expectations, the Challenger Job Cuts jumped to the highest reading for the month of October since 2003. This morning's Consumer Sentiment reading from the University of Michigan registered its second-lowest reading ever, though the government shutdown, which has been the longest in history, likely impacted the report. On the plus side, readings from the services side of the U.S. economy were firm, and the Atlanta Fed GDP Nowcast was revised up to 4.0%. Here's the breakdown from this week's reports:

• Challenger Job Cuts: Increased 183% from the prior month to 153,074 in October. That represents the highest level for any October since 2003. This has been the worst year of announced layoffs since 2009.
• ADP Employment Change: +42K vs. +26K est.
• University of Michigan Consumer Sentiment: Fell to 50.3 in November from 53.6 in October, which was below the 53.2 expected and represents the second lowest reading ever. Within the report, current economic conditions dropped to 52.3 (from 58.6) and the index of consumer expectations fell to 49.0 from 50.3. One year inflation expectations ticked up to 4.7% from 4.6% while long-run inflation expectations declined to 3.6% from 3.9% (both month-over-month).
• ISM Manufacturing Index: Fell to 48.7% in October from 49.1% in September, which represents the eighth straight month of contraction (a reading below 50.00 represents contraction, above 50.00 expansion).
• ISM Services: Moved up to 52.4% in October from 50.0% in September.
• S&P Global U.S. Manufacturing PMI – Final: Moved up to 52.5 in October from 52.0 in September.
• S&P Global U.S. Services PMI – Final: Rose to 54.8 from 54.2 in September.
• EIA Crude Oil Inventories: +5.20M barrels
• EIA Natural Gas Inventories: +33 bcf
• The Atlanta Fed's GDPNow "nowcast" for Q3 GDP was revised up to +4.0% from 3.9% following the release of the ISM Services report.

The Treasury yield curve saw some steepening this week, as short-term yields fell more than longer-term yields. The shorter-term term yield drop appears to be driven by the weak Challenger report and this morning's consumer confidence data. Compared to last Friday, two-year Treasury yields are down over seven basis points (3.531% vs. 3.606%), 10-year yields are down ~3 basis points (4.068% vs. 4.101%) and 30-year yields are higher by a little over one basis point (4.681% vs. 4.669%).

Expectations around potential rate cuts from the Fed ticked up this week, perhaps driven by some of the soft economic data referenced above. According to Bloomberg, the probability of a 25-basis-point cut at the December Federal Open Market Committee (FOMC) meeting moved up to 72% from last Fridays 68%, and the total number of 25-basis-point cuts between now and the end of 2026 remains at three.

The S&P 500 index (SPX) is on track to be down ~2.7% this week, at least at the time of this writing (11:50 a.m. ET). Perhaps more importantly, from a technical perspective, is that the index is dropping below its 50-day Simple Moving Average (SMA) for the first time since April. There hasn't been a "reflexive bounce" at this potential "support level" yet, but there's still time in today's session. Where the index closes today could be an important tell, meaning a close above the 50-day SMA would be bullish, and a close below the 50-day SMA may suggest more near-term downside. Evidence that support is holding up at this indicator could foster "dip buying" investor behavior, while a lack of support could keep investors sidelined, so we could be at a bit of an inflection point. I don't have the luxury of seeing where the index closes today, but if the SPX can close above its 50-day SMA (6,668), this would be technically bullish. If the SPX closes below 6.668 today, then a rebound is still possible on Monday, but otherwise technically bearish.    

Technical translation: near-term cautious, need more time to see whether support kicks in at 50-day SMA

Last week I noted that the Russell 2000 Index (RUT) looked the weakest out of all the majors, technically speaking. The RUT is on track to be down ~3.4% this week, and perhaps more important from a technical perspective, the index failed to find support at the 50-day SMA. On Wednesday the RUT attempted a bounce off this indicator, but over the last 48 hours has rolled over. This puts the index is in the near-term bearish technical camp until/unless it can get back above its 50-day SMA. If stocks bounce next week, watch for a "pullback" to the underside of its 50-day SMA. If the RUT runs up to the underside of tis 50-day SMA and then subsequently falters, that would represent a classic bearish confirmation.

Technical translation: near-term bearish

Last week I highlighted Visa's push into the stablecoin arena, and this week credit card issuer Mastercard looks to be following suit. Mastercard announced on Wednesday that it is collaborating with crypto trading platform Gemini and Ripple to explore using RLUSD stablecoins (XRPL) to settle fiat card transactions. "Once implemented, this will mark one of the first collaborations where a regulated U.S. bank settles traditional card transactions using a regulated stablecoin on a public blockchain," the companies said in a statement. Gemini currently offers an XRP edition of its credit card via WebBank and last month launched a "Solana edition" of its credit card, which offers up to 4% back in SOL token rewards.

The Bloomberg chart below shows the current percentage of members within the S&P 500 (SPX), Nasdaq Composite (CCMP), and Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). Stocks are on track for weekly losses and market breadth has deteriorated as a result. In fact, market breadth on the S&P 500 dropped to a four-month low this week. On a week-over-week basis, the SPX (white line) breadth dropped to 53.09% from 55.69%, the CCMP (blue line) decreased to 45.30% from 50.10%, and the RTY (red line) slid to 53.24% from 55.38%.

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, percentage of stocks within an index that are above or below a longer-term moving average, or new highs vs. new lows.

This Week's Notable 52-week Highs (27 today): Bank of America Corp. (BAC - $0.06 to $53.22), Fabrinet Inc. (FN - $14.29 to $446.95), Leidos Holdings Inc. (LDOS + $0.84 to $195.60), Ross Stores Inc. (ROST + $0.90 to $161.13), Sanmina Corp. (SANM - $3.13 to $169.37), Wells Fargo & Company (WFC - $0.39 to $85.20)

This Week's Notable 52-week Lows (172 today): Charter Communications Inc. (CHTR - $1.99 to $215.86), Clorox Company (CLX + $0.26 to $106.54), Decker's Outdoor Corp. (DECK + $1.12 to $80.93), FactSet Research Systems Inc. (FDS + $5.99 to $259.61), Gartner Inc. (IT + $0.51 to $226.95), Owens Corning Inc. (OC - $0.37 to $104.56)