Weeks Review into W/C 17th October 2022-Post CPI  Collapse

Weeks Review into W/C 17th October 2022-Post CPI Collapse

October 16, 2022 0 By The Balanced Trader

Last Weeks Summary

Weeks Summary

U.S. equities suffered losses at the end of a choppy week as investors’ enthusiasm for Thursday’s turnaround rally subsided. In contrast to the S&P 500 and Nasdaq, which had weekly losses of 1.5% and 3%, respectively, the Dow ended the week 1.2% ahead. Due to the hotter-than-expected inflation news on Thursday, U.S. Treasury rates had an erratic week. The 10-year note’s yield increased to almost 4%, reaching its highest level since 2008. The price of crude oil dropped over 7% this week after rising 15% the previous week due to worries about a slowdown in demand as Chinese cities reinstated COVID-19 lockdowns and a rise in U.S. crude inventories of 9.9 million barrels, according to a report from the Energy Information Administration (EIA). West Texas Intermediate (WTI) crude’s price finished the week at just over $85.

OVERVIEW + CORRELATIONS

Events Calendar:

KEY TAKEAWAYS

  • Next week will be one of the busiest of the corporate earnings season. Dozens of prominent companies including Bank of America, Goldman Sachs, Johnson & Johnson, Netflix, United Airlines, American Airlines, Tesla, Procter & Gamble, AT&T, Verizon, and American Express are scheduled to report.
  • The latest updates on the housing market will become available, including September housing starts, building permits, and existing home sales.
  • On Monday, China will release its third-quarter GDP figures, providing a key update on the world’s second-largest economy.
  • On Wednesday, the U.K.’s Office for National Statistics will release inflation figures for the month of September.

A Busy Earnings Week

Earnings season will begin one of its busiest weeks on Monday. Financial sector earnings will come from Bank of America, BNY Mellon, and Charles Schwab on Monday, followed by Goldman Sachs, Barclays, and others later in the week. Johnson & Johnson, Lockheed Martin, and Netflix will report on Tuesday, followed by Tesla and Procter & Gamble on Wednesday. AT&T will report on Thursday, while Verizon and American Express will follow on Friday.

Third-quarter earnings could prove to be a mixed bag for the corporate sector at large, as a rising dollar and a general economic slowdown impact profitability. Earnings growth for S&P 500 companies is expected to average just 2.4%, which would mark the weakest quarter since an average 5.7% net loss in the third quarter of 2020. Among S&P 500 companies, 65 have reported negative earnings guidance while just 41 have issued positive guidance according to research by FactSet.1

Events Calendar:

Monday, October 17

  • Bank of America (BAC), Charles Schwab (SCHW), Bank of New York Mellon (BK), Equity Lifestyle Properties (ELS), and Zions Bancorp (ZION) report earnings
  • New York Empire State Manufacturing Index (Oct)
  • China GDP Growth Rate (Q3 2022)

Tuesday, October 18

  • Johnson & Johnson (JNJ), Lockheed Martin (LMT), Netflix (NFLX), Intuitive Surgical (ISRG), Truist Financial (TFC), State Street Corp. (STT), J.B. Hunt (JBHT), Albertsons Companies (ACI), First Horizon Corp. (FHN), United Airlines (UAL), Hasbro Inc. (HAS), Signature Bank (SBNY), Interactive Brokers Group (IBKR), Pinnacle Financial Partners (PNFP), and Hancock Whitney Corp. (HWC) report earnings
  • NAHB Housing Market Index (Oct)
  • Industrial Production (Sep)
  • Eurozone ZEW Economic Sentiment Index (Oct)

Wednesday, October 19

  • Tesla (TSLA), Procter & Gamble (PG), Abbott Laboratories (ABT), NextEra Energy (NEE), Elevance Health (ELV), IBM (IBM), Prologis (PLD), Crown Castle (CCI), Lam Research Corp. (LRCX), Kinder Morgan (KMI), The Travelers Companies (TRV), Biogen (BIIB), M&T Bank (MTB), Nasdaq Inc. (NDAQ), Las Vegas Sands (LVS), Baker Hughes (BKR), Equifax (EFX), Northern Trust Corp. (NTRS), Citizens Financial Group (CFG), Steel Dynamics (STLD), Ally Financial (ALLY), Knight Transportation Inc. (KNX), and Alcoa Corporation (AA) report earnings
  • Housing Starts (Sep)
  • Building Permits (Sep)
  • U.K. Inflation Rate (Sep)
  • Fed Beige Book Release

Thursday, October 20

  • Danaher (DHR), Philip Morris International (PM), Union Pacific (UNP), AT&T (T), Marsh & McLennan Cos. (MMC), Blackstone Inc. (BX), CSX Corp. (CSX), ABB Ltd. (ABB), Freeport-McMoran (FCX), Dow Inc. (DOW), Nucor Corp. (NUE), Barclays PLC (BCS), Nokia (NOK), Tractor Supply Co. (TSCO), SVB Financial Group (SIVB), Snap Inc. (SNAP), Quest Diagnostics (DGX), Robert Half International (RHI), Webster Financial Corporation (WBS), American Airlines (AAL), Whirlpool Corp. (WHR), and Crocs Inc. (CROX) report earnings
  • Existing Home Sales (Sep)
  • Philadelphia Fed Manufacturing Index (Oct)

Friday, October 21

  • Verizon (VZ), American Express (AXP), Goldman Sachs (GS), Schlumberger (SLB), HCA Healthcare (HCA), Regions Financial Corp. (RF), and Autoliv (ALV) report earnings
  • Eurozone Consumer Confidence – Flash Estimate (Oct)

Weekend Reading:

Weekly Review

Review week’s RTH before I look at the profiles. Can you see where price action and reversals can you identify where the price becomes stuck–look at the overlapping profiles does this help? Look at last week’s references Look at the shape of the daily profiles.

Last week’s profile was included. It helps if you can define references that are meaningful, these include key swing lows/highs from major events like NFP, weekly POC VAH VAL, MA/s 5/20/50 100 /200 VWAP OPEN LAST SETTLE HVN LVN GAPS

Weeks Price Action Review

Why look at the Weekly and Monthly?

Using the composite profiles gives me a lot of clarity in understanding the market. Understanding the story and the basic mechanics of what is going on simplifies almost every other aspect of my trading, especially timing.

By identifying areas of balance/ acceptance in the auction I have a natural edge. I can identify value and the pivots of change. In balance I look to fade the extremes, when activity leaves an area of acceptance, I monitor for strength and conviction of the move. For this, I use volume and value as a guide. As a general rule, if a move is genuine, volume and value will move in away from prior acceptance to a new area.

Notable Tweets

All images can be found on my Twitter feed in high resolution. Please let me know if you have issues much appreciated.