The Morning Call
11/3/25
The
Market
Technical
The S&P was down on the week but remained
above that very short term uptrend off of the May low. Indeed, as long as it
stays above that trend line (and perhaps the uptrend of the April low), it is in
a rising wedge which is historically positive for equities. In addition, the
S&P remains above all three DMAs, in uptrends across all timeframes and is
moving into the most positive seasonal time of the year. On the other hand, breadth
has been abysmal and the chatter about a credit crisis and inflation has
increased dramatically---but that could be just a lifting of a ‘wall of worry’.
All that
said, I remain of the opinion that this is a market to trade not invest in long
term. If you do, be sure to have close in stops.
Most market
sectors are getting smoked.
https://talkmarkets.com/content/us-markets/most-market-sectors-are-getting-smoked?post=532408
Goldman goes
Defcon 1 on imploding consumer.
More from Goldman.
https://www.zerohedge.com/markets/goldman-trading-desk-sees-early-signs-explosive-move
And even more.
As defined by
those three higher lows and three higher highs, TLT continues in a very short
term uptrend. And it is above all three DMAs. On the other hand, it is in
downtrends across all time frames and has yet to mount a serious challenge of
the upper boundary of its short term downtrend. I wouldn’t bet heavily on a
change of direction until that threshold is breached.
Gold was down on
the week but went sideways after a big Monday selloff. The good news is that it
remains above all three DMAs and in uptrends across all timeframes. The bad
news, at least in the short term, is that it was grossly overextended to the
upside. So, some retreat was to be expected. Indeed, it could do much more sideways
trading before challenging either its 200 DMA or the lower boundary of its
short term uptrend. And so far, it has shown little sign of finding a bottom. I
am still contemplating re-establishing my trading position in GDX, but gold is going
to have to show more life before I do.
The dollar had another good week, managing to successfully
challenge its 200 DMA to the upside (it is already above its 50 and 100 DMAs). That
could be a sign that the worst is over. But I will hold off on that call until
we get more data on inflation and the credit problem.
Friday in the
charts.
Friday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Fundamental
Headlines
The
Economy
With the
government shutdown continuing, there were very few stats released last week. What
was produced was positive. Overseas, the indicators were upbeat though there
were two neutral and two negative inflation datapoints.
Given the lack of
US economic indicators, my ‘muddle through’ forecast remains on hold. As does
the ‘inflation is as good as it is going to get’ call, though the overseas
numbers as well as a growing chorus of economists fearing inflation has
breathed some strength in my confidence level.
Two important
events last week to comment on:
First, while the
FOMC lowered rates as expected, Powell comments following the conclusion of the
meeting were hawkish, indicating a divided FOMC. That had an immediate adverse
impact on the odds of a December cut; and while they remain above 50%, (1) they
have declined from prior highs and (2) as I noted above, a growing chorus of
economists are now voicing concern about inflation.
Second, Trump made
some progress on the trade front, inking a deal with South Korea and a truce
with the Chinese that will ease concerns (and inflationary pressures) at least
in the short term.
Finally, I repeat
my cautionary note from last week: I would also opine that despite no new
negative developments; it is too soon to dismiss the apparent deterioration in
the credit markets. So whether or not we have a crisis, we should certainly be
on alert---meaning one more negative event will activate the yellow flashing
light on my ‘muddle through’ scenario.
It
also reinforces my position that this is a Market to trade not invest in.
US
International
The October EU manufacturing
PMI was 50.0, in line; the October German manufacturing PMI was 49.6, also in
line; the October UK manufacturing PMI was 49.7 versus 49.6.
Other
With the caveat of
limited data, the current nowcasts suggest the GDP grew 3.8% in Q3.
https://www.capitalspectator.com/
The US cannot protect its way to prosperity.
Worried about AI? We have been here before.
https://www.aei.org/economics/anxious-about-ai-weve-been-here-before/
60 day auto loan delinquencies.
https://econbrowser.com/archives/2025/10/non-federal-statistic-of-the-day
The October
Chicago PMI came in at 43.8 versus consensus of 42.0.
The week ahead.
ECONOMIC
WEEK AHEAD: November 3-7
The largest trucking capacity purge in
history.
https://www.zerohedge.com/markets/largest-trucking-capacity-purge-history-coming
Monetary Policy
Update on the Fed’s balance sheet.
Investing
If it is a bubble, so what?
https://brklyninvestor.com/2025/10/25/if-its-a-bubble-so-what/
This is a very long article. At least read the
summary points.
https://www.dbresearch.com/PROD/RI-PROD/PDFVIEWER.calias?pdfViewerPdfUrl=PROD0000000000607211
Citadel macro guru warns.
The latest from JP Morgan.
The eye of the storm.
https://www.zerohedge.com/markets/eye-stock-market-sht-storm
Uptober for stocks and bonds.
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-five-tells-go-short-bubble-market
AI spending spree tests the laws of gravity.
https://www.zerohedge.com/the-market-ear/let-them-eat-llms
News on Stocks in Our Portfolios
Exxon Mobil (XOM) declares $1.03/share quarter
What
I am reading today
John Tamny on Sorkin’s ‘1929’.
Fighter drones now in testing.
https://www.zerohedge.com/military/andurils-yfq-44-fury-fighter-drone-has-flown
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