The Past Week In A Nutshell -- What Happened

 Last week ended positively despite the uncertainty-driven news cycle.

Remember This

“Market swings can be unsettling, and there’s a lot to think about with today’s headlines,” noted Lindsey Bell, chief investment strategist for Ally Inc-owned Ally Invest (ALLY).

“However, history has proven to us repeatedly that it’s best to wait them out. The S&P 500 has moved 2% or more in 42 trading days this year, the most since 2008, yet the index is still up year-to-date. We’re also in the early innings of an economic recovery, so we believe stocks could run higher in the coming years. But investors need to be patient because it likely won’t be a straight line up.”

Pictured: Profile chart of the Micro E-mini S&P 500 Futures

Technical Analysis

Broad-market equity indices ended the week higher, with the S&P 500 retracing 50% of the September sell-off.

During Last Week’s Action

Participants defended the low-volume area -- which denotes upside directional conviction -- below $3,320.

Most notable was what happened after Thursday’s failure to extend past responsive selling at the $3,370 high-volume ledge. The lack of conviction resolved itself in Friday's overnight liquidation on news that U.S. President Donald Trump contracted COVID-19, thus returning the market back into balance.

Defense of the low-volume area, alongside the development of low-excess highs during the U.S. cash session, suggests the potential for further upside. Auctioning through the low-volume area, however, may trigger downside follow-through, with the S&P 500 moving as far as the $3,198 swing low.

Fundamental Analysis

ARK Invest CEO and CIO Catherine Wood suggested another stimulus bill could be released prior to the election, with airlines being one major beneficiary. One problem with such a bill, however, is that the economy has hit escape velocity and some of the stimulus included may not be necessary.

"We also, in terms of fiscal policy, hope that these policies are not going to get in the way of so-called creative destruction. What we mean by that is disruptive innovation tends to take off during difficult times. But, if companies and industries are being subsidized just to hang on a little longer, that’s probably not good for anyone."

Simply put, Wood theorizes the government's stimulus of dying industries is a disservice, as it diverts resources to less productive areas of the economy.

Key Events

• Monday, October 5: Fed Barkin Speech, ISM Non-Manufacturing, Fed Evans Speech, and Fed Bostic Speech.
• Tuesday, October 6: Balance of Trade, Fed Chair Powell Speech, Fed Harker Speech, and Fed Kaplan Speech.
• Wednesday, October 7: MBA Mortgage Applications, Fed Barkin Speech, EIA Cushing Crude Oil Stocks Change, EIA Distillate Stocks Change, FOMC Minutes, Fed Williams Speech, Fed Kashkari Speech, Consumer Credit Change, Fed Williams Speech, and Fed Evans Speech.
• Thursday, October 8: Initial Claims, Continuing Claims, Fed Barkin Speech, and Fed Kaplan Speech.
• Friday, October 9: Wholesale Inventories.

Recent News

• U.S. election to supercharge structural trends, increased focus on sustainability.
• Azerbaijan (Turkey-backed) and Armenia (close to Russia, Iran) conflict flares.
• If the president holds onto Florida, then the entire election grows far closer.
• The Treasury market’s size to outstrip dealer capacity to safely intermediate.
• FAA Chief conducts two-hour evaluation of Boeing Co. (BA) 737 MAX.
• Technology companies cozy up to Biden campaign with cash and connections.
• U.S. auto sales stay on a path to recovery despite the tighter inventories.
• Boeing Co. to move 787 production to South Carolina in 2021.
• Fed’s Kaplan says he wants to be careful about further quantitative easing.
• U.S. job growth slows; nearly 4 million Americans permanently unemployed.
• Ford Motor Company (F)'s auto sales recover on a demand pickup.
• Uber Technologies Inc. (UBER) logistics division has raised $500 million.
• House Speaker Pelosi says airline aid deal is near, asks for halt to job cuts.
• Tesla Inc. (TSLA) reports record deliveries, Model 3 underwhelms.
• Lawmakers pressure U.S. trade representatives to strike Taiwan trade deal.
• Tesla Inc. cut price on Chinese Model 3 with CATL battery.
• Wall Street is preparing its systems for the election trading surge, volatility.
• The COVID-19 vaccines further along in clinical trials are hardest to deploy.
• China’s support for infrastructure investment will aid the economic recovery.
• Structural shifts triggered by the pandemic to benefit a tech subsectors.
• Senator McConnell cancels scheduled senate floor votes for two weeks.
• ‘I wasn’t feeling so well. I feel much better now’: Trump’s address to America.
• China’s economic recovery from the pandemic helps drive its stocks higher.
• COVID-19 will lead to lasting behavioral changes in consumption and work.

Key Metrics

• Sentiment: 26.2% Bullish, 30.7% Neutral, and 43.1% Bearish as of September 30.
• Gamma Exposure: (Trending Lower) 921,593,487 as of October 2.
• Dark Pool Index: (Trending Higher) 44.7% as of October 2.

Product Snapshot -- S&P 500 E-mini Futures (ES) | SPDR S&P 500 ETF Trust (SPY)

Gold Futures (GC) | SPDR Gold Trust (GLD)

 Crude Oil (CL) | United States Oil Fund LP (USO) | Invesco DB Oil Fund (DBO) | United States 12 Month Oil Fund (USL)

Treasury Bonds (ZB) | iShares 20+ Year Treasury Bond (TLT)