VIDEO: Here's What to Watch This Week in Earnings and on the S&P 500

In today's Action Alerts PLUS Daily Rundown, Bob Lang puts Monday's trading in the context of recent equity strength and discusses the S&P 500 moving average to watch. He then talks about seasonal market patterns this time of year.

Lastly, Bob previews the earnings reports to watch in the week ahead.

BOB LANG: Good morning Action Alerts PLUS subscribers. It's Monday, October 24, 2022. It's great to be with you today. Time for our rundown. And as usual, lots to cover. So let's get to it.

Strong rally ensued on Friday on some big volume and big price action that broke the S&P 500 above its 20-day moving average for a close and a weekly close above some key levels for the first time in a couple of months. We had mentioned last week a move up towards that 3,800 level would be an interesting spot for resistance. And even above there-- 3,850 and then 3,900. We're looking at perhaps that 3,900 level being an area where this rally is going to terminate. But of course, we're not going to make predictions here. We're just going to let it go and see what happens at that point in time.

Overnight, we did see some quite a bit of wild action, of course, with some news out of China as well. Some of the China names are getting hammered today. We did see some currency problems as well, too. The Japanese yen fell really hard early in the session. And again, with the futures market having dropped about 36 handles after being up 52 handles earlier in the overnight session, it just means a lot of volatility there.

And of course with volatility, the VIX being up around 30%, we're expecting about 2% moves each and every day. So it should not be surprising to see that kind of movement even in a futures market. So Friday, again, come back to Friday with that big strong rally. It was a little peculiar to us being stoked by a Wall Street Journal article saying that it appears that in the November meeting, which is coming up in about a week and a half, they're going to discuss potentially lesser rate hikes. Not fewer rate hikes, but lesser potential rate hikes.

Now, it appears the market has been pricing in for the past couple of weeks a 75 basis point hike in November and a 75 basis point hike in December. It appears that maybe they'll be slowing down that rate hike aggressiveness in December, perhaps a 50 basis point rate hike, and maybe above to 5% in the early part of 2023. And that might be it.

So again, this is all speculation from this article. It's speculation from me. The markets are pricing in much higher rates down the road. And not just higher rates, but higher rates for longer. So we have to remember that just because the Fed does not want to raise interest rates any more, it doesn't necessarily mean they're going to be cutting rates.

And of course, the next move after raising interest rates is going to be to cut rates. But when will they be cutting rates? It will be further down the road. And I think the equity markets are going to already have felt a little bit more pain than they have in 2022. So let's talk about some positive seasonal trends that are coming up this week.

So this week we have the last week of trading week in October. And of course, Monday's the last day-- Halloween. But there are some positive seasonal trends. About 80% of the time we've seen markets rising the last three to four days of October into the early part of November. So over the last, again, 30-35 years, it's a really good statistic and really good odds that the markets are going to be up just before the election coming in in the early part of November. So I'll be watching that.

So lastly, we're watching earnings. Of course, a huge week of earnings is coming in four or five days. 1,000 companies or more are going to be reporting, including several on the Action Alert Plus Portfolio. Those names include UPS tomorrow morning. We'll have Microsoft and Alphabet tomorrow afternoon. And then later in the week of course, Amazon and Apple.

And then big energy earnings coming out at the end of the week. Now, we don't have specifically Chevron or Exxon, which are reporting on Friday. But we do have the XLE. And these two names are about 45% of that XLE ETF. So that's ingrained in our portfolio. We've seen some good earnings reports more recently.

It's mostly from the banks. But more interestingly, a couple of names that we added recently. Elevance and Lockheed Martin reported stellar earnings last week, along with strong guidance. And then the prior week we had a big report from Pepsi. And they also boosted guidance as well too. So it's nice to see some of the new names that we've had added into the portfolio do extremely well on the earnings front and provide some good strong guidance. It's something we haven't seen very much over the past couple of quarters.

So we'll see how our tech names and some of the energy names that we have reporting later on this week, how they view 2023 going forward. So that's going to be it, everyone. Have a great day, and we'll see you tomorrow.