October 27, 2021
Good morning,
Futures have been just a little soft overnight, vacillating between down a tick and unchanged, ahead of earnings results from more of the biggest U.S. companies not officially considered big-tech (although every big company in the world is heavily laden with tech – hence the reason “tech” will likely lead world economies for long as one wants to imagine – but I digress). Official big-tech names resume reporting tomorrow with Apple and Amazon.
Since earnings season began 2 weeks ago with JPM’s glowing report, the S&P has had a steady rise for 10 consecutive days of 6.2% from intra-day low to high for the period. Not bad for a 2yr old bull. The VIX meanwhile has settled down from the upper 20’s during September’s correction to the mid-teens now suggesting a calmer market environment. Could we get a pause today – sure, winning streaks rarely last more than 10-11 days before a rest. However, the market was deeply oversold with very bearish sentiment (emotions) coming into earnings season and it’s somewhat comforting, when considering the duration of the current rally, to see that those oversold readings have been neutralized but are not yet overbought.
If there is any headwind for the equity market stemming from month end rebalancing (mentioned Monday), it should begin today with 2-day settlements. Perhaps it will lead to the pause that refreshes. A person can dream you know.
Be well,
Mike