Weekly Briefing 10/31/21 - The Forecast

Weekly Briefing 10/31/21

Weekly Briefing 10/31/21

Markets are delivering our forecasted rally into the FOMC meeting scheduled for next week. We still expect some volatility during November, but higher prices are still forecast into mid-December. Exact support levels for November and price targets for the December peak will be updated in our Nightly Briefings.

Market Recap:

Last week, markets witnessed sharp price swings as earnings were delivered from some of the biggest market-leading companies.  The major indexes all finished the week in the green with the Dow, the S&P 500, and finally the Nasdaq all hitting record highs. The easing of the energy crisis in Europe, positive economic surprises, and dominantly bullish corporate earnings reports all supported the rally, even though some big names like Apple (AAPL) and Amazon (AMZN) reported weaker-than-expected numbers.  While the Biden administration’s spending packages are still making their way through a divided congress, markets remain optimistic of a deal getting done shortly.

Most of the week’s key economic releases supported the bullish case for domestic growth – particularly the  consumer confidence number, the Chicago PMI, the Richmond Manufacturing Index, and durable goods orders. Despite the weak third quarter GDP print and accelerating inflation, all signs point to an uptick in activity in the fourth quarter. The pandemic-era low in the number of new jobless claims is especially encouraging. The housing market sent mixed signals as mortgage rates hit eight-month highs, and new home sales surged higher by much more than expected, but pending home sales did drop sharply in September.

The technical picture remains bullish across the board for major indexes. The Dow, the Nasdaq, and the S&P 500 are still all above their rising 50-day moving averages, and the benchmarks are high above their 200-day moving averages. Small-caps failed to build on their recent bullish momentum, and while the Russell 2000 finished the week above both of its moving averages, it remains stuck below its all-time high from March. We expect this to change in November. The Volatility Index (VIX) bounced off the 15 level following weeks of decline, as the fear gauge continues to be clearly above its pandemic-era low ahead of next week’s Fed meeting, closing the week near 16.5.

November will start with a slew of key economic releases and corporate earnings, not to mention the Fed’s crucial monetary meeting. According to the latest hints from the FOMC members, the Central Bank might reduce its monthly asset purchases which could hurt risk assets in the coming months. The ISM manufacturing PMI will come out on Monday and the services PMI, Fed minutes, and ADP payrolls will be out on Wednesday. The Challenger job cuts estimate and the OPEC meeting is scheduled for Thursday, and the week will end with the highly-anticipated government jobs report.

We continue to deliver timely crypto updates with our new crypto service. We expect a strong  altcoin rally to develop between November and February. They key to altcoin investing is to risk only what you can afford to lose and never chase. Buy them when they sleep and sell them when they leap. On Friday, we highlighted one of our favorite altcoins called Casper which has incredible utility and functionality. It is tied very closely with Ethereum’s future which bodes well for the coin long term.