Stocks Hit New Highs in Busiest Week of Earnings Season

Weekly Wrap Content for the week of Oct 29:

1. Week 43 major indexes performance;

2. Week 43 US sector indexes performance;

3. Major indexes monthly performance for Oct

4. Major indexes weekly charts of support and resistance levels;

U.S

For the week ended Oct 29, the major indexes recorded gains and reached new highs. The week was the busiest of the third-quarter earnings reporting season, with several technology and internet-related giants announcing results, helping to keep trading volumes elevated. After a 5.2% correction in Sep, markets were up nicely in October, with the SPX returning an impressive 6.9% for this month and up over 1.0% for the week. Refer to major indexes’ weekly performance and monthly performance tables below.

Key highlights for the week/coming week:

1.    Biden’s new social spending framework-about $1.75 trillion. While the proposal has not been endorsed by all factions of the Democratic party, policy makers are looking to get the bill passed in the weeks ahead, along with a vote on the $1.2 trillion infrastructure package in the House. 

2.    FOMC meetings scheduled in the coming week Nov 2-3. The Fed has indicated consistently that it plans to begin with tapering of asset purchases (which it will likely begin next week and conclude in mid-2022) and then pause before deciding on a rate hiking decision. Historically markets have performed reasonably well in periods of tapering and into the start of rate hiking. It is only towards the end of a rate-hiking cycle that we tend to see more severe volatility. 

3.    Supply chain problems appeared to remain at the forefront, with both Amazon.com and Apple falling back and dragging the indexes lower on Friday morning after reporting lower growth forecasts because of labor and input shortages.

For the week, among 11 SPX sectors, Consumer discretionary(XLY) shares fared best, boosted by a jump in Tesla shares—bringing the firm’s market capitalization above USD 1 trillion—following news that rental firm Hertz Global agreed to buy 100,000 of its electric vehicles. Energy(XLE) and Financial(XLF) shares underperformed as oil prices fell back from multi-year highs.

Technically, all three major indexes weekly are in nice uptrend. All three indexes hit new record highs.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) lost around 1%. The property sector, which accounts for about one-third of China’s overall economy, has stirred investor anxiety in recent weeks following defaults, credit rating downgrades and, most recently, a proposed tax plan as authorities seek to reduce leverage among leading developers.

New tech regulations. On the regulatory front, Beijing’s clampdown on the tech sector continued as the country’s internet watchdog proposed restrictions on companies with more than 1 million users with a security review before they can send user-related data abroad. Also, the PBOC warned that online brokerages unlicensed in China are acting illegally if they serve Chinese clients via the internet. In a speech, a PBOC official compared cross-border online brokerages to “driving in China without a driver’s license.” Popular online brokers Tencent-backed FUTU(also called moomoo in Singapore and U.S) and Xiao-mi backed UP Fintech( tiger broker parent) both dropped 26% and 27% in the week.

Hang Kong(.HSI weekly chart) stocks closed first weekly lower after four-week up in a row. Dragged down by tech and developers.

Singapore

STI index(STI weekly chart) closed with modest loss this week after a three-week up streak, the index appears very resilient.