What' s needed for stocks to rally is capitulation but that could come from unexpected sources strategist says Article_Normal - Article_Normal HEAD TOPICS

What' s needed for stocks to rally is capitulation but that could come from unexpected sources strategist says

10/21/2022 1:47:00 PM

A rally can begin without a surge in the Vix or a financial blowup somewhere

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What’s needed for stocks to rally is capitulation, but that could come from unexpected sources, strategist says A rally can begin without a surge in the Vix or a financial blowup somewhere Uncertainty is hobbling the bulls. Many traders seem minded. given that the S&P 500’s year-to-date drop of 23% has improved valuations. to embrace a mostly positive earnings season.To make them feel better the market needs a cathartic blowout. A last frenzy of selling that exhausts the bears and sets the stage for a sustainable rally. In other words, yes: capitulation! And he has a list. First, “Inflation ‘hard data’ could capitulate, syncing up with the ‘soft data’ which have been showing growing signs of falling inflation.”How about the tight labor market finally capitulating, says Lee, with falling job openings and less wage growth pressures (though he accepts that currently strong jobless claims data don’t presently support this scenario). Read more:
MarketWatch » Skull Session: Devin Barclay's Game-Winning Kick Against Iowa Was Electric, The Shoe is Expensive to Maintain and Cade Stover's Draft Stock is Rising Bernstein downgrades Snap, says it's unclear what's next for the social media stock after latest earnings Here's the history of countertrend rallies — and why one strategist expects more false starts Jets may finally have to put offense on Zach Wilson’s shoulders vs. ‘loaded’ foe

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Sterling rallied on Thursday and investors reined in their bets on a big Bank of England interest rate hike in November as UK Prime Minister Liz Truss announced her resignation just six weeks after she was appointed. Read more >> Skull Session: Devin Barclay's Game-Winning Kick Against Iowa Was Electric, The Shoe is Expensive to Maintain and Cade Stover's Draft Stock is RisingDevin Barclay downed Iowa with a game-winning kick in November 2009, Gene Smith says no structural changes are coming to the Shoe and Cade Stover's draft stock is rising. Man, why do I not remember this kick lol I was sitting in B deck Too lazy to read/want to test my knowledge. Was this when Ricky Stanzi was QB for Iowa Feel like that ended in a game winning FG Bernstein downgrades Snap, says it's unclear what's next for the social media stock after latest earningsThe firm lowered its rating after Snap reported poor third-quarter revenue results and softer user engagement numbers. Here's the history of countertrend rallies — and why one strategist expects more false startsJeffrey Schulze, investment strategist at ClearBridge Investments, went down memory lane to look at the history of countertrend rallies Jets may finally have to put offense on Zach Wilson’s shoulders vs. ‘loaded’ foeZach Wilson and the Jets ought to know what’s coming when they face the Broncos on Sunday in Denver. It’s the end of what felt like another very choppy week in stocks.October 19, 2022 The most important note that Smith makes in the brief podcast is that he doesn't foresee altercations to the structure of Ohio Stadium, only enhancements to make the already-wonderful Horseshoe better for the fans.WATCH LIVE It's hard to say where Snap will go from here after its third-quarter results, according to Bernstein.It’s been a nice few days for the stock market, with the S&P 500 SPX rising three of the last four sessions, including 4% over just the last two days. And yet the S&P 500 SPX is in line to start the final session only about 1% or so below last Friday’s close. Uncertainty is hobbling the bulls."I see enhancement with our scoreboard, sound system and maybe some premium seat areas like we added with the Loge areas in the northwest corner of the stadium, but I don't see any major structural issues as we move into the near future. Many traders seem minded. "With a stock down -85% over the past 12 months, suggesting that investor expectations were low going into earnings is an understatement. given that the S&P 500’s year-to-date drop of 23% has improved valuations. However, after learning about the cost of maintaining the Horseshoe, I am confident that the decision to add the logos to the playing surface was strictly for financial purposes. to embrace a mostly positive earnings season.. But. Also, I wasn't expecting a dome to be added to the House that Harley Built, but at least I know with certainty that it won't happen anytime soon.6% from Thursday's closing price of $10... That means no are heading down the pike, and that's music to my ears. It’s the end of what felt like another very choppy week in stocks. A possible recession has weighed on advertising revenue this year for Snap. And yet the S&P 500 SPX is in line to start the final session only about 1% or so below last Friday’s close. Entering the 2022 season, Cade Stover had five catches for 76 yards in his Ohio State career. Two of the past three recessions saw even bigger countertrend rallies before the final lows were established. Uncertainty is hobbling the bulls. Many traders seem minded., collecting 16 receptions for 206 yards and two touchdowns. "SNAP's untapped potential remains, yet we're unlikely to see near-term inflection. given that the S&P 500’s year-to-date drop of 23% has improved valuations. to embrace a mostly positive earnings season.. But a 10-year Treasury yield TMUBMUSD10Y surging to 4." Morgan Stanley remained underweight on the company, saying the company is dealing with "over reliant on branded, less proven spend, high execution risk with management/strategic change" against a more challenging economic backdrop.4%. 25% for the first time since the great financial crisis is a looming reminder that to do so would be fighting the Fed. As Tom Lee, head of research at Fundstrat says after conversations with clients this week: “The main question is why should any investor expect equity prices to stage any meaningful gain from here, in the midst of a Fed tightening cycle and in the midst of great uncertainty around the Russia-Ukraine war, increasing stress in financial markets (UK issue tabled for now) and in the midst of massive gloom of CEOs and Americans and investors.” To make them feel better the market needs a cathartic blowout. —CNBC's Michael Bloom contributed to this report. A last frenzy of selling that exhausts the bears and sets the stage for a sustainable rally. In other words, yes: capitulation! The problem, says Lee, is that investors reckon that the path of least resistance in the market is for equities to capitulate. Schulze, however, is pessimistic, noting the rising risks from his firm’s recession risk dashboard (though it’s given false signals before). A scenario where the CBOE Vix index VIX , the gauge of expected S&P 500 volatility, spikes above 40, stocks drop another 20% and there is some sort of financial accident, like a hedge fund imploding. “But this is not the only ‘capitulation’ that could lay ahead,” he argues in his latest note. “There are other forms of ‘capitulations’ that could similarly boost investor confidence, in turn, fueling a firm footing for equities.” And he has a list. First, “Inflation ‘hard data’ could capitulate, syncing up with the ‘soft data’ which have been showing growing signs of falling inflation.S. ” This in turn could cause the Fed reaction function to capitulate and shift the central bank from hiking by 75 basis point after every strong consumer price index report. Next, another type of Fed capitulation is if it shifts “to a more ‘inflation tolerance’ view, acknowledging part of core inflation reflects supply chain tightness (transportation services) and recognizing severe lags in data such as shelter/rent CPI component”. How about the tight labor market finally capitulating, says Lee, with falling job openings and less wage growth pressures (though he accepts that currently strong jobless claims data don’t presently support this scenario). Also, it may be possible that given the surge in yields of late, fixed income bulls start finding the bond market increasingly attractive even before data turns or the Fed signals pivot. “Interest rates could stop powering higher,” a “capitulate on yield” if you will. The buzz Netflix NFLX shares jumped 12% in premarket trade after posting surprisingly strong subscriber numbers. Finally, investment sentiment has largely already capitulated. “The BofA fund manager survey shows that institutional investors most underweight equities in more than 20 years,” Lee notes. He summarizes: “There are multiple pathways for markets to move higher. And while investors are mostly expecting equity markets to capitulate. There are other capitulations that could drive asset prices higher.S. ” Markets Benchmark 10-year Treasury yields TMUBMUSD10Y rose 4.3 basis points to 4.276%, their highest since 2008, as investors priced in stubborn inflation and more Federal Reserve rate hikes. The move up in yields hit S&P 500 futures ES00 , down 0.7% to 3650 and lifted the dollar index DXY , up 0.K. 6% to 113.51. Worries about slowing demand pushed WTI crude futures CL.1 down 0.3% to $84. Since military call-ups started, the men of Moscow are noticeably missing. 25 a barrel. The buzz Snap shares SNAP are slumping more than 25% to trade at their lowest since early 2019 after the messaging app, following Thursday’s close, announced widening losses and said revenue growth would slow. Twitter shares TWTR fell more than 8% to around $48 a share in premarket action after reports Elon Musk said he would cut 75% of the workforce. Musk is supposed to be paying $54.20 a share so that he could carry out any such threat, so it’s thought the slide has more to do with reports the U. Random reads McDonald’s ‘adult Happy Meal’ toys are being listed for up to $300,000 on eBay. S. is considering national security reviews for some of Musk’s ventures. The U.S. third quarter earnings season continues, with Verizon VZ , American Express AXP , Seagate STX , and Schlumberger SLB among those presenting their figures.m. The dollar moved above 150 yen USDJPY as the Bank of Japan’s determination to maintain its loose monetary policy pushed the yield spread between 10-year U.S. and Japanese government bonds TMBMKJP-10Y above 4%. Weeks of political and financial market turmoil, with inflation back to a 40-year high of 10.1%, has pushed U. K. consumer sentiment to its worst in half a century. Little surprise then that the country’s retail sales fell 1.4% in September, much worse than the expected 0.5% decline. Gilts TMBMKGB-10Y and the pound GBPUSD were in retreat after the sales data and ahead of a weekend of jostling to be the next leader of the governing Conservative Party, and thus the new U.K. Prime Minister. Best of the web Toxic workplaces are bad for your health, says Surgeon General. Six ways to protect yourself from online scammers. The lessons from Liz Truss’s downfall to other European leaders. The chart “Equity investors seem sharply focused on timing the peak in inflation and central bank hawkishness. And with economic data remaining historically volatile and difficult to forecast, the importance of economic data releases has grown to levels not seen in years, if ever,” says the global equity derivatives team at Bank of America. As the chart below shows, this has left the stock market becoming increasingly reactive to economic data surprises. “The last two quarters saw the most ‘excess’ S&P futures intraday realized volatility around key data prints since at least 2018, and the last three quarters have been among the five highest,” says BofA. Top tickers Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern. Random reads Eve the Kelpie dog sells for $49,000. Chess prodigy accused of cheating files $100 million defamation suit. Paul McCartney in the Dandy. Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern. Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton .