To The Moon

Earnings reports of major U.S. listed companies continue to be released intensively.

As of Tuesday, nearly 100 S&P 500 companies had reported earnings, more than half of which had beaten expectations, for like $Coca-Cola(KO)$ ,$General Motors(GM)$,$United Parcel Service Inc(UPS)$ , $Visa(V)$, $Halliburton(HAL)$ , $Biogen(BIIB)$ , $Yalla Group(YALA)$ , etc. And $JetBlue Airways(JBLU)$ , $Xerox(XRX)$ , $3M(MMM)$ , $General Electric Co(GE)$ and etc. announced earnings failed to exceed expectations.

1. Technology Giants $Alphabet(GOOG)$ , $Microsoft(MSFT)$ , and $Texas Instruments(TXN)$ fell sharply at after-hours with miss Q3 earnings:

$Alphabet(GOOG)$ 's revenue in third quarter of fiscal 2022 was $69.092 billion, an increase of 6% year-on-year, and net profit was $13.910 billion,a fell 26.5% year-on-year; diluted earnings per share was $1.06, higher than the $1.40 of the same period last year. $Alphabet(GOOG)$ fell more than 6% in after-hours trading.

$Microsoft(MSFT)$ also released a disappointed results: company's revenue in the fiscal quarter was $50.122 billion, an increase of 11% from $45.317 billion in the same period last year; but its net profit was $17.556 billion, a year-on-year decrease of 14%. $( Microsoft)$ dropped more than 6% in after-hours trading.

Although the chip giant $Texas Instruments(TXN)$, regarded as a barometer of the semiconductor industry, exceeded expectations in earnings per share and revenue, its Q4 performance guidance fell short of expectations, indicating that the downturn in the semiconductor industry is spreading to areas other than computers and mobile phones. $(Texas Instruments)$ fell 5.06% after the market, followed by Texas Instruments, analog chip stocks $Analog Devices(ADI)$ also fell after the market.

2. Technical Analysis: Indexes needs a short-term or two-day callback, reduce positions is recommended, but shorting is not recommended.

After the market on Tuesday, $S&P 500(.SPX)$,$NASDAQ(.IXIC)$ , $DJIA(DJIA)$ fell. People began to worry about the end of the short-term rebound going to stop and $S&P 500(.SPX)$ will not surpass 3860 points, and plan to want to start buy put……

In general, the four indices, $S&P 500(.SPX)$, $DJIA(DJIA)$, $NASDAQ(.IXIC)$ , $IWM(IWM)$ rushed fast in recent days and might have to take a break. The overall daily pattern of the indices is relatively strong, firmly above MACD5.

And, in detail, the $SPX is currently near the pressure of short-term challenge 50DMA (3868.49points) and 2Hr 200hma (3870points), coupled with short-term negative earnings results. A pullback is required. However, if $S&P 500(.SPX)$ does not fall below MACD20 (3678points), we may still be brave to hunt for dips.

In addition, from the charts of Bollinger Bands: $S&P 500(.SPX)$ successfully stood on the middle Bollinger line on last Friday, which is the first time since July to break through and stand firm, so the medium-term upward trend still depends on the support of Bollinger middle rail.

Short-term or a small pullback is possible. If it does not fall below the middle rail support(3689 points), we can continue to long the market.

Therefore, under the background of such technical analysis, the short-term is likely to rush down before or during the session on Wednesday, and this rush can be appropriately lightened positions for protection. You can consider to sell position first (but shorting is not recommended), then buy again after the 2 days, because there is a 60% probability that it will fall for about 2 days, and then it will rise, the support for this continued rise usually refers to MACD10.

From the pure moving average, such an upward wave will continue to rise if it touches MACD5 for the first time, but then it is likely to touch MACD10, then UP, and then UP, if this place quickly surpasses the previous high, it will firm a very stable bull market.(Look at Middle July to Middle August for references)

Note, investment is risky, technical analysis is only for communication, not as direct investment advice.

Some Other Factors to Focus

1. Factset: Corporate earnings forecast to be further lowered

Wall Street analysts have cut their Q3 earnings estimates for U.S. stocks by the most since the outbreak began in 2020, according to FactSet. At the end of March 22022, analysts expected third-quarter profits for $S&P 500(.SPX)$ companies to rise 9.5% from a year earlier, but now expect a rise of just 1.5%.

Many market observers believe that earnings forecasts for U.S. stock earnings reports will be further lowered, especially for next year. Analysts expect S&P 500 profits to rise by only about 7% year over year in 2023.

2. U.S. home prices drop the most since the 2009 financial crisis

On Tuesday, U.S. house price data showed that after the first month-on-month drop in house prices in the 20 cities in July, the decline continued in August, with the largest month-on-month drop during the 2009 financial crisis. The year-on-year increase also "slammed on the brakes". In August, the U.S. national house price index increased by 13% year-on-year, and the growth rate slowed down from the previous month to the greatest extent in history.

Demand has been hit hard with mostly subdued housing data in recent months as U.S. mortgage rates have soared due to aggressive rate hikes by the Federal Reserve. 

On November 2, the market is likely to expect the Fed to raise interest rates by 75bps:

Join to Discuss: Fed's Meeting(2 Nov): 50 or 75 bps?