“US benchmark large-cap indexes finished October at record highs, earnings results were at the forefront of market activity into October’s end and will continue into November.”— Paul Ebeling
DJIA +89.08 at 35819.56, NAS Comp +50.27 at 15498.38, S&P 500 +8.96 at 4605.38
The big-cap gainers offset the negative influence from 7 of the 11 S&P 500 sectors. The RE sector (-1.2%) underperformed.
The VIX readings below 20 favor a “risk on/bullish” approach to markets. Volatility has been sinking with a recent probe into the 14’s, its lowest reading since early July.
The Weekly AAII Sentiment as of October 27 shows Bullishness slipped -7%, but still about +2% above its historical average. Bearishness rose a little +2%, leaving it within -1% below its historical average.
The Fear & Greed Index sits around the 74 in the moderately bullish/greed vicinity, its highest reading YTD.
My Key indicator: The NYSE McClellan Oscillator measures the spread between the 19 and 39-Day MAs of Advancing vs. Declining stocks. Gradually improving in early October, it jumped over +40 recently to support the bid higher among equities.
From a Bearish view, any signs of sellers regaining control back below 50-Day MAs would be a Red flag that the Northside momentum is in jeopardy, my work does not see that happening.
Looking Ahead: Investors will receive the ISM Manufacturing Index for October, Construction Spending for September, and the final IHS Markit Manufacturing PMI for October Monday.
- S&P 500 +22.6% YTD
- NAS Comp +20.3% YTD
- DJIA +17.0% YTD
- Russell 2000 +16.3% YTD
Reviewing Friday’s US economic data, as follows:
- Personal income declined 1.0% M-M in September with the expiration of unemployment benefits and decreases in general in government social benefits. Personal spending was up 0.6% M-M. The PCE Price Index increased 0.3% M-M, as expected, and the core-PCE Price Index increased 0.2%, in-line with estimates. On a Y-Y basis, the PCE Price Index was up 4.4%, Vs 4.2% in August, and the core-PCE Price Index was up 3.6% for the 4th month running exuding inflation pressure.
- The Key takeaway from the report was inflation pressure and the recognition that the drop in income prompted consumers to spend out of savings to meet their needs and wants. The personal savings rate as a percentage of disposable personal income fell to 7.5% from 9.2%.
- The final October University of Michigan Index of Consumer Sentiment increased to 71.7 from the preliminary reading of 71.4. The final reading for September was 72.8.
- The Key takeaway from the report is the disclosure that consumers feel the most uncertainty about the yr-ahead inflation rate than anytime in 40 yrs.
- The Q-3 Employment Cost Index was up 1.3% following a 0.7% increase in Q-2. Wages and salaries, which account for about 70% of compensation costs, increased 1.5%, while benefit costs, which make up the remainder of compensation costs, increased 0.9%.
- The Key takeaway from the report is that wages and salaries for workers were up from the same frame a yr ago, those gains have increasingly been subsumed by inflation, evidenced by the 5.3% increase in the PCE Price Index seen in the advance Q-3 GDP report.
- The Chicago PMI increased to 68.4 in October from 64.7 in September.
Have a happy, healthy, Prosperous weekend, Keep the Faith!