Fourth Quarter Rally:
- There is debate about whether there will be a fourth quarter rally in the stock market.
- Some analysts, like Mike Wilson, believe that the chances of a Q4 rally have decreased due to cautious factor leadership, falling earnings revisions, and fading consumer and business confidence.
- However, others argue that historical seasonality tendencies suggest a year-end rally is likely to occur.
- The performance of mega-cap leaders post-earnings has not been strong, with many stocks trading down despite beating expectations.
Breadth:
- Breadth indicators show that the percentage of stocks above their 200-day moving average is below 30% and the percentage above their 50-day moving average is at washout levels.
- This indicates weak breadth in the market, as most stocks are experiencing negative price action.
- However, some argue that this could present an opportunity for a catch-up trade among smaller stocks.
Economic Surprise Index:
- The economic surprise index measures how economic data compares to consensus expectations.
- Currently, it is showing positive surprises more often than not, indicating that economic news has been better than expected.
- Historically, when the economic surprise index remains above 50 for a sustained period of time, it has led to higher stock market returns over the next three to six months.
Stock Market vs Economic News:
- It's important to note that economic surprise index does not necessarily correlate with leading economic indicators.
- While leading economic indicators may still point to weakness in certain areas of the economy, positive surprises in economic data can boost sentiment and potentially drive stock market gains.
Year-end Outlook:
- Bullish arguments include potential tax loss selling being behind us and seasonal tendencies suggesting a year-end rally.
- Bearish arguments highlight weak breadth indicators and concerns about inflation pressures continuing to weigh on markets.
Apple's MacBook Pro laptops and M3 chips:
- Apple's MacBook Pro laptops will no longer include Intel chips and will instead be powered by Apple's own M1 line of chips, which are rapidly catching up in terms of performance.
- The M3 chip series was launched, with three versions: M3, M3 Pro, and M3 Max. These chips have advanced capabilities for CPU and GPU processing, similar to what NVIDIA offers.
- This move by Apple is significant as it shows their increasing expertise in chip design and puts them on par with other large tech companies like Google, Microsoft, and Meta who are also making their own chips.
Arista Networks (ANET) earnings:
- Arista Networks reported strong earnings with beats on both the top and bottom lines.
- Earnings were $1.83 per share compared to an expected $1.58 per share.
- Revenue was $1.51 billion, up nearly 30% YoY.
- ANET is benefiting from being bundled with NVIDIA in design wins for data centers focused on AI workflows.
Ford stock decline:
- Ford's stock has experienced a significant decline over the years, dropping from a peak market cap of around $100 billion in 2021 to its current market cap of around $40 billion.
Long-term winners in the stock market:
- Data shows that 70% of companies listed in the Russell 3000 index have experienced at least a 40% decline from which they never recovered. This highlights the difficulty of picking long-term winners in the stock market.