Market Briefing For Monday, Oct. 20

'Deescalation' is the theme going into a new trading week. Although there was some late Friday reprieve from the up-down activity of the week just past, there is still residual angst that could make the start of trading rocky; with irate pundits that only chased old-generation tickers, having hubris by suggesting Quantum and drone stocks were only higher because of crowds reading 'X' posts (I'll take that as flattery in case the inference lands right here).

Reality is such media characters not only missed-the-boat on Quantum and/or Drones, but advocated tired blue-chips and overpriced mega-caps, with zero serious delving into new-era stocks. As noted before, more realistic analysis came from JP Morgan, which not only talked about more cockroaches (I said I agreed with CEO Dimon about regional banks; but few big-bank problems); plus he advocated a plan to invest in many new-guard stocks we've followed. It may not always be the same exact issues, but in the neighborhood.

Globally, the geostrategic context of newfound pressure upon NATO & the EU due to Russia pushing, hence increased bilateral tensions or rising fears that false flag provocations in Europe could occur (that is mostly propaganda but a smidgen of possibilities as many politicians would like to get rid of the Russian enclave between Estonia and Lithuania; it's a holdover Soviet territorial grab.

The upcoming Budapest Summit will be potentially historic; although Trump already conceded too much by suggesting the 'parties just stop where they're at now and go home'. Of course that would surrender not just the Donbass in the East of Ukraine but also all of Crimea to the Russians without negotiating; so that's a non-starter and diminishes Trump's own role by volunteering that in this stage, rather than at the Conference, if indeed something akin is realistic.

I personally had commented two years ago about making the Dmipro River a border, and recognizing that Crimea 'was' Russia before Khrushcev gave it to Kiev as a Christmas present (Nikita was Ukrainian and didn't expect all this). I am not saying that should be it; but some discussion of that nature. Also note that Moscow signed the 'Security Pact' for Ukraine, which is why Ukraine let the United States Air Force remove their nuclear missiles. Everyone seems to forget that; as Kiev should be bitter, simply because security was assured.

Lastly Treasury Secretary Bessent (he really is a 'master' of Administration correctness as adjustments are needed) has assured that there's not going to be 100% China tariffs, and for now the meeting with President Xi is back on; so that matters (although with Budapest coming there's really room for shifts in timing that aren't known yet). And a nod to Venezuela where never has the Government stated in advance where the CIA is operating; but perhaps that a cover should Maduro capture any of our people and avoid embarrassment as we 'knew' they were there. Maduro needs to go; hopefully with little violence; and Carlos (proxy for Maria in the Election) needs to be installed (he won in a controlled election, where he got over 70% of the vote despite the dictator's regime controlling precincts. Hence the vote was likely even more lopsided as opposed to Maduro. Some are claiming the U.S. already has a beachhead but I don't think so; and I do have one reader in Venezuela (so far) able to relate at least some information; such as people panicking or buying canned goods.

Just a short summary after an exhausting week, which ended with signs of deescalation; and also implies some fairly decent trading buying opportunities were provide during the mostly-banking canard worry shakeouts. Also the Federal shutdown delays many probably Defense and Aviation contract or awards, so much news will be pending; including the U.S. Army's new procurement procedure which is forthcoming in a couple weeks. Meanwhile you have a (presumed decent) Earnings Parade coming, followed the next week by a likely Fed rate cut; and we won't hear more than ruminations about that given it's a 'quiet week' ahead of the FOMC Meeting. If we can get a bit of a move going in the 'true' new-Guard tickers; some short-covering could assist upside too. There really is no bearish case for most of these; just a question of when the catch fire anew; even though of course we're not at as low a point as our prior entries, and this should be kept in mind (an existing low-cost holder adding more on dips in a presumed uptrend is not the same as a FOMO chaser entering for the first time and certainly not into strength. 

 

Bottom-line: 'generally' we ought to see the market consolidate oh a bit more as the new week starts, such as 'up' to start, dip for intraweek trading entries, and then advance somewhat. Probably tenuous even for a day or two, then a more solid advance. It will likely vary from that outline; anything close is fine.

Initially the rally will be based on the exaggeration of credit or banking issues (the major banks are well capitalized and there are not cockroaches all over the system; aside perhaps some regional banks; and where that is an issue it will be resolved, as has occurred before). Hence it is not a 'real' market worry.

As this evolves, the clarion calls of effete pundits or analysts to focus only on beaten-down dividend-payers, will give way to returning to concentrating on a slew of 'new-era' AI, 'data analytics' Application Software, Drone or related, as well as Quantum Computing tickers. The blather about froth contributed to some of last week's shakeout; but they were in parabolic trends justifying a correction; and if anything we were surprised it didn't happen sooner.

Now we ought to see another thrust developing higher, while antagonists will tend to proclaim it's the 'last thrust'. No it won't be; and M&A activity will also be on the horizon in this sector. Of course it's solely for the brave among us, and that's no different than has been the case for just over a year now.


More By This Author:

Market Briefing For Monday, Oct. 13
Market Briefing For Monday, Oct. 6
Market Briefing For Monday, Sept. 29, 2025

This is an excerpt from Gene's Daily Briefing (distributed nightly), which typically includes videos as well as more charts and analysis. You can subscribe  more

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