Critical Trading Days Ahead: Tech Earnings, Economic Data, and Market Volatility | October 30, 2024
The next few trading days are set to be pivotal, driven by major tech earnings, economic data, and geopolitical factors. Despite some volatility in the Nasdaq, large-cap tech stocks, particularly Alphabet, show resilience. Alphabet’s earnings reinforced the sector’s AI growth story, presenting potential dip-buying opportunities, especially after recent pullbacks. With the Nasdaq eyeing a retest of recent highs, the broader tech sector maintains strong momentum — unless a significant negative event arises.
Meanwhile, rising bond yields, notably the 10-year yield, haven’t yet dented big tech. However, they could pressure smaller, speculative sectors like small caps and crypto assets, especially if inflation data exceeds expectations. So far, stronger-than-expected GDP growth and labor market figures have supported equities. This contrasts with lower-than-expected Q3 GDP growth at 2.8%, suggesting modest softening but not enough to shift market sentiment significantly. The robust ADP jobs report of 233,000, well above the anticipated 110,000, signals continued strength in the labor market, which could influence Fed policy.
As the election nears, market volatility is high, hinting at uncertainty reminiscent of 2020’s contested outcome. Prolonged uncertainty could sustain volatility, but clarity in election results could stabilize markets quickly. In the tech sector, major AI stocks like Nvidia and suppliers such as Supermicro are seeing early weakness. This, alongside AMD’s softer earnings, is weighing on the broader semiconductor sector, dampening sentiment despite Alphabet’s gains. Key economic indicators, including GDP, private payrolls, and inflation, will further shape the market outlook this week.
Technical indicators highlight mixed signals: the S&P 500 hovers below a wedge pattern, suggesting possible downside. However, if it approaches major support levels, a bounce is likely. Resistance remains around recent highs, crucial for determining whether the index aims for a move toward 6,000 or pulls back further. In the bond market, yields recently pulled back from a wedge pattern, hinting at potential reversals if economic data continues to soften. This aligns with a long position on TLT, anticipating falling yields amid a cooling economy.
Alphabet presents a bullish cup-and-handle pattern, though resistance around $192 could trigger profit-taking. AMD is finding support near $153 but could test lower levels. On the other hand, Bitcoin recently pulled back from its double top near $74,000, indicating potential for a breakout, albeit with caution due to past reversals. MicroStrategy mirrors Bitcoin’s volatility, currently signaling a bearish setup.
In other sectors, Eli Lilly has broken below a key trendline, suggesting a short strategy on strength, with support around $772 and $748. Caterpillar remains in an uptrend, with support near $370. Gold is holding steady amid geopolitical tensions, though a pullback could occur post-election if stability returns. Silver remains weaker than gold, while oil approaches support around $65. Natural gas requires patience for a better entry point.
Overall, the market remains event-driven, with earnings reports and economic data shaping sentiment in the short term. Staying attentive to technical signals and macroeconomic trends will be crucial in navigating this phase effectively.
