Published November 11th 2023

Daily Brief - ☀️ The year end rally

TLDR: That dip yesterday could be a technical correction (trendlines are scary) more than the beginning of the retracement. But what about the year-end rally?

Seasonality Returns 5Y Histor, 3M forward

Our Candle Breadth Leading Indicator recently breached its 95 threshold. When this happened in the past, if SPX kept rallying then the rally was capped at ~4% in the next month.

All of this to say, the upside from here is limited. 4% gives you a ~4,570 SPX top, which looks just about right on the chart. There’s exactly 0 investors who would buy that level with enthusiasm.

On the flipside after 8 days of rally the downside seems equally open, say back to 4,200 which gives us also ~4% on the downside.

So where to henceforth? It’s a balanced market (dovish Fed, falling inflation, ok earnings, ok PMIs, value abounds), and range-bound price action is likely. History would say the next 3 months see a rally, if not a huge one.

For investors, this means nothing. Stick to your core allocation, which in our opinion should include a healthy helping of UST 10s and 5s

For traders, this feels more like a strangle market. A condor maybe? VIX 15 is fairly mid-range, it’s not like buying 12 but neither 20.

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

As we approach the conclusion of the third-quarter earnings season, the spotlight turns to retailers, with industry giants such as Walmart, Target, and Home Depot set to provide crucial insights. These companies play a pivotal role in reflecting the pulse of the US consumer, a key driver of economic growth.

Walmart's expanding market share in the grocery sector holds promise for bolstering its overall revenue. However, caution is warranted, as our analysis of historical earnings data reveals a tendency for Walmart's stock to dip in the week following a reported earnings-per-share (EPS) beat.

Meanwhile, Target grapples with a decline in customer traffic, attributed to a shift in demand away from consumer discretionary products. Despite surpassing EPS expectations last quarter, Target's stock witnessed a subsequent decline.

Lastly, Home Depot faces challenges amid high inflation and a shortage of homes, presenting potential hurdles in the short term. Nevertheless, historical trends indicate that Home Depot's stock tends to exhibit upward movement, even in cases of missing earnings expectations.

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Earnings Update: Tyson Foods reports on Monday

Tyson Foods reports on Monday

A look at that skew of positive returns in TSN when the company beats EPS expectations! However, important to note that the company has missed earnings expectations over the past 3 quarters.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: Ouch Tesla!

Tesla price graph

A sell rating from HSBC led to Tesla stock dropping 5% yesterday. What next?

Toggle Pros can head over to the Scenario tool and build a condition to find out how Tesla could perform next after its price drops 5% in 1 day.

Reach out to if you need any help with building this 👨‍💻

General Interest: Sam & Elon

Sam Altman & Elon Musk exchange tweets

LOL one has to love tech-bro enmities.

Elon was notoriously miffed by how his $100M donation to OpenAI led to the creation of a $80BN company - with no slice of the pie for Musk.

So he created Grok, reimplementing the idea that he applied on Twitter: free speech. If you follow Open AI from the onset, you will know that the system has been ring-fenced within a tight set of rules to avoid offensive and questionable answers.

Well, Grok has no such qualms - free speech baby! Try it here.

Daily Brief - ☀️ The year end rally

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