The rally was primarily led by solid earnings posted by the financials, often deemed as bellwethers of the economy, indicating that it’s not all gloom and doom in the markets. Additionally, the UK markets rebounded on a U-turn by the UK finance minister on tax cuts, adding more fuel to the rally. However, it seems that the rally may not stand on a firm foundation, as the CEO of MOTT Capital, Michael J. Kramer, shared a chart of Nasdaq 100 futures on Twitter on October 18. Namely, the chart shows the futures touching the lower Bollinger band, after which a rally to the 20-day moving average ensues, and the rally petters off after that.
Signal watching
Investors are keeping their eyes on the markets, looking for signals that the stock market has bottomed and a new rally may be starting. On the other hand, analysts are not so sure that the market is yet out of the woods. During CNBC’s Fast Money show, analyst Guy Adami claimed that this jump looks like a classic bear market rally.
Earnings season
While earnings season may be a double-edged sword, the initial bank earnings were positive; if that continues with financials and spills over into other firms’ reports, the rally may continue past the analyst expectations. On the other hand, bad news from major firms in terms of earnings and full-year guidance could prematurely stop the rally and see the markets head down yet again. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
