We must begin by unequivocally stating that terrorism is terrorism, no matter where it occurs, and it should be condemned in the strongest possible terms. The recent terrorist attacks in Israel are nothing short of barbaric. Whether you find yourself on one side of the Palestinian-Israeli debate or the other, the slaughter of innocent civilians can never be justified.
Amid the constant flow of financial news and market data that can sometimes desensitize us to the human stories behind the economic figures, the recent events in Israel serve as an urgent reminder of the importance and need for a shared humanity.
To truly grasp the gravity of the situation, consider this: in a single day, over 1,000 innocent civilians lost their lives in a mass terrorist attack in Israel. These were not soldiers or combatants, but everyday people who had gathered to enjoy a music festival or simply living their day-to-day lives at home. The sheer horror and devastation that this event inflicted upon the Israeli population are difficult to put into words. To provide a point of reference, what transpired in Israel last week would be akin to over 30,000 Americans being killed in a single day, in cities across the United States. This terror spared no one, targeting women, children, and the elderly.
The response to these heinous attacks has been mixed, as is often the case with complex geopolitical issues. However, there should be no complexity to this. This is not two sovereign nations interacting in a conflict over land. This is a terrorist group attacking a Western nation by killing innocent civilians - a Western nation that is ruled democratically with the freedom of religion.
Nevertheless, there is a glimmer of hope amid the chaos. Government officials are now reevaluating their previous statements that either blamed Israel or sought to justify these acts. Prominent figures, including President Biden, have unambiguously condemned the actions of Hamas. Furthermore, it appears that some members of the House of Representatives are distancing themselves from any support for Hamas, marking a significant shift in their stance.
No matter where one stands politically or in terms of religious beliefs, the stark reality remains: innocent lives were brutally taken in broad daylight. Hamas, much like ISIS or Al Qaeda, has demonstrated a resolute unwillingness to engage in peace negotiations with Israel or the West. Israel, faced with a relentless barrage of terror, has no option but to defend itself, as any nation would under comparable circumstances.
However, what's troubling is the mental acrobatics that some individuals engage in as they attempt to rationalize these attacks. Justifying the killing of innocent people based on the actions of a state is eerily reminiscent of the rhetoric used by Islamic extremists following the 9/11 attacks. It's essential to bear in mind that the majority of civilians on both sides of the Israeli-Palestinian divide yearn for peace. In stark contrast, Hamas seems bent on sowing seeds of hatred, mistrust, and death - their goal is not land-based but genocide-based. Hamas is not looking to solve a land dispute but to eviscerate the Jewish people from this earth.
One colloquial comparison that comes to mind and is often brought forth when tensions in Israel heighten is that if Hamas puts down their weapons there will be no war tomorrow, if Israel puts down their weapons there will be no Israel - and furthermore, no living Jewish people tomorrow. When comparing the terrorists to the nation of Israel it is important to remember that one side is fighting to protect its babies while the other uses their babies as shields.
As news continues to pour out from the region I urge you to remain informed and vigilant. Complacency and indifference are a victory for evil and a blow to humanity. My heart goes out to all who were and continue to be impacted.
In the realm of finance, it's easy to become preoccupied with numbers, stock indices, and economic indicators, often losing sight of the human faces behind the investments and financial decisions we make. The events in Israel underscore the intricate interplay between geopolitics, human rights, and financial markets. As we navigate these turbulent waters, let's remember that our empathy, our shared condemnation of barbaric acts, and our unwavering commitment to peace can be potent drivers of change, not only within the world of finance but in the broader context of the world itself.
Recent Trade Review
Back to Business: this week, we'd like to highlight a recent trade opportunity identified during one of our live trading room sessions.
During a recent live trading room session, our DPT model identified a promising long opportunity in Eli Lilly and Co ($LLY). I entered this position on Wednesday and look forward to the start of earnings season as a catalyst for LLY.
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Stay tuned for more trade reviews and updates from our live trading room sessions, where opportunities are not just identified but acted upon promptly to help you make the most of your trading endeavors.
CURRENT TRADING LANDSCAPE
On Friday, the stock market experienced a decline as investors closely examined earnings reports from major banks, shedding new light on the state of the U.S. economy. Following the recent release of inflation data, attention has now shifted towards earnings season, with significant financial institutions reporting their results. This focus is expected to persist in the upcoming weeks, as more reports are scheduled to emerge. The mixed market performance to close out the week can be attributed to concerns regarding rising inflation and ongoing global uncertainties, particularly with regard to the Middle East, which continued to drive fluctuations in oil prices.
As earnings season took center stage, the results have been promising. Among the standout performers, JPMorgan Chase stood tall, reporting robust third-quarter earnings that not only exceeded the expectations of analysts but also marked a substantial increase from the previous year's earnings. This sent Chase shares surging. Additionally, Citigroup's strategic decisions appear to be yielding positive results, and Wells Fargo managed to surpass market expectations, contributing to a positive sentiment among investors.
Other notable figures in the corporate earnings landscape included BlackRock, the world's largest money manager, which delivered results that exceeded expectations, recording $3 billion of quarterly net inflows. UnitedHealth, the managed care company, also performed admirably, with adjusted earnings beating analysts' estimates. UnitedHealth further raised its full-year outlook, resulting in an impressive increase in its stock.
Progressive was yet another bright spot, with the insurance company reporting better-than-expected third-quarter earnings. While, on the other hand, Microsoft's eagerly awaited $75 billion acquisition of Activision Blizzard received regulatory approval in the U.K., clearing the path for the deal's closure. Microsoft shares experienced a modest dip of 0.7%, while Activision's stock also slipped.
PepsiCo, an early bird in the earnings season, reported stellar results. The company disclosed impressive third-quarter adjusted earnings, outperforming market expectations. Additionally, PepsiCo posted revenue of $23.5 billion, surpassing market forecasts. Conversely, Groupon faced a stark decline, with shares plummeting over 30% due to a significant reduction in the valuation of its stake.
Prior to earnings, the week’s marquee event was the latest inflation data gauged from the CPI and PPI data. These metrics provide a window into the dynamics of inflation and pricing trends, offering crucial information for investors, policymakers, and businesses.
In recent data releases, the CPI indicated that consumer prices climbed at a 3.7% annual pace in September. This figure, slightly higher than consensus expectations, reflects the upward pressure on prices. It's worth noting that energy costs and shelter expenses remained firm, contributing to this inflationary environment. On a monthly basis, the headline index rose by 0.4%, a bit above the anticipated 0.3%.
For policymakers at the Federal Reserve, these numbers imply that the battle against inflation is still ongoing. However, the core CPI, which excludes volatile food and energy components, offers a more hopeful perspective. It showed that core prices increased by 0.3% in September, aligning with the previous month's pace. On an annual basis, this indicated a 4.1% rate of core price increases. The moderation in the core index comes as encouraging news, potentially indicating that the Fed's efforts to cool down the economy through interest rate hikes may be having an impact.
On the other side of the economic spectrum, the Producer Price Index (PPI) provides a view of inflation from the perspective of producers. It measures the average change over time in the selling prices received by domestic producers for their output, including both goods and services.
In its recent release, the PPI showed a 0.5% increase in September from the previous month. This figure, while a slowdown from the August increase of 0.7%, still exceeded expectations, which were set at 0.3%. When focusing on core producer prices, which exclude food and energy, the numbers were slightly higher than expected as well, rising by 0.3% for the month.
The PPI data underscore that inflation remains a persistent concern, with upward pressure on producer costs. Despite the slowdown in the monthly growth rate, these numbers are significant as they affect pricing dynamics throughout the supply chain, potentially influencing consumer prices in the future.
The upward movement in both CPI and PPI data highlights the delicate balancing act that the Federal Reserve must manage. As they work to contain inflation and ensure overall economic health, investors will be watching these indicators closely for signs of whether interest rates will be adjusted in response to the evolving economic landscape.
These indicators, along with other economic data, will continue to shape investment strategies, policy decisions, and business planning in the months ahead. As investors, policymakers, and businesses navigate the economic landscape, understanding and interpreting the implications of CPI and PPI data remains a critical component of making informed decisions.
In the realm of commodities, crude oil prices were a focal point of discussion. The escalating tensions in the Middle East following last week's Hamas attacks fueled apprehensions about potential disruptions to oil production and shipments. WTI and Brent crude prices surged significantly, with investors bracing for the consequences of geopolitical risks.
Thus far, market trends demonstrated ongoing concerns across several fronts. Europe, small-cap stocks, technology companies, cyclicals, and regional banks showed signs of weakness. As the technology sector and the $SPY index grappled with the 50-day moving average, the U.S. dollar ($DXY) continued its multi-month rally.
In response to these dynamics, some market participants transitioned to a market-neutral stance. While economic data indicates a low probability of a recession, ongoing challenges persist. The SPY's rally may encounter resistance in the $450-470 range, with short-term support at $400-430. More downside movement is anticipated, and a possible breach of August lows looms on the horizon. While October may bring volatility, the expectation is that better-than-expected earnings and year-end seasonality will contribute to market stability. For reference, the SPY Seasonal Chart is shown below:
As investors continue to navigate this dynamic trading landscape, vigilance, adaptability, and responsiveness remain paramount. Earnings will continue to be released next week and based on the latest levels our A.I. has identified a sector and symbol of interest!
Tick tock… the clock is ticking!
The next earnings season is right around the corner, and you don't want to miss out on the lucrative trading opportunities it will bring.
As we delve deeper into the trading landscape, it's crucial to pinpoint sectors that hold potential for strategic investments. With the insights gathered from our previous discussion on recent market developments, one sector has captured our and our A.I.’s attention. Earnings will likely provide some market direction and this particular sector is due for run to the upside.
The Technology Select Sector SPDR Fund (XLK) is a compelling sector within the stock market. It boasts a diversified portfolio of leading technology companies, making it an attractive choice for investors looking to capitalize on innovation, growth, and evolving market dynamics. XLK includes industry giants like Apple, Microsoft, and Alphabet (Google), reflecting a broad spectrum of tech-related businesses.
As we analyze the current market conditions and levels, it becomes evident that technology companies are well-positioned to thrive. The recent earnings reports from major banks have contributed to a positive sentiment, but concerns regarding inflation and geopolitical tensions continue to sway investor sentiment. This environment creates a backdrop where tech companies, known for their resilience and adaptability, are likely to remain attractive.
Moreover, technology has become an integral part of our daily lives, with increasing reliance on digital solutions and services. This trend, often accelerated by global challenges, such as remote work and e-commerce, has further amplified the importance of the tech sector. Having backed off its 52-week high, XLK has room to the upside. Given its potential to weather economic headwinds and drive innovation, XLK appears to be a prudent choice for those seeking stability and growth. But digging deeper, I’ve identified another symbol I will be looking to add this week.
TRADE OF THE WEEK: $GOOGL Stock Price To Increase from AI Boom
In the world of tech and innovation, Google needs no introduction. Alphabet Inc. (GOOGL) stands out as a dominant player and as AI technologies continue to reshape industries and economies, Google, a leader in AI development, remains at the forefront. Its deep investments in artificial intelligence, machine learning, and data analysis are propelling the company's growth.
Beyond search, Google's robust portfolio includes YouTube, Android, and Cloud services, among others. With a commitment to advancing AI technologies and data-driven solutions, Google is well-positioned for future growth.
The current market conditions, including strong earnings reports from key players, present an opportune moment to consider $GOOGL. The growing importance of AI and data-driven solutions in various industries underscores Google's potential for sustained growth. As businesses increasingly rely on AI to enhance operations and deliver tailored solutions, Google's cutting-edge capabilities position it favorably. Having seen a market-wide dip in recent weeks tech is positioned for a nice bounce back and it could start as early as earnings season!
In the upcoming week, our AI prediction suggests that Google's stock price is poised for an increase. For reference, please see the $GOOGL 10-Day Predicted Data below:
This week, I’ll be adding $GOOGL to my portfolio!
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As always, remember to conduct thorough research and consider your risk tolerance before making any investment decisions.
One more thing, I've had the opportunity to take additional action with a great organization supporting families in Ukraine directly. Gate.org is a foundation where fundraising is held for specific families, allocating funds to multiple families currently living in Ukraine. I am on the board of directors for this great initiative and encourage everyone to check it out and donate if possible. The war in Ukraine is escalating and families are being negatively impacted and displaced daily. To learn more about this initiative to help families, please see the link below:
Wishing you a week filled with resilience, growth, and prosperous opportunities!