Senate Steps Closer to Ending Shutdown, 'Hammer Goji' on Chart
An end to record-long shutdown appears in sight; also happy birthday to the Marines and let's chart the S&P.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
At last... some movement. Late Sunday, the Senate finally made some progress, overcoming procedural issues to put the legislative body in a position to end the now record-long shutdown of the federal government. Eight moderate Democrat party senators joined the Republican party caucus in the Senate in a 60-40 vote on a measure to at least take up the spending bill that had already passed in the House of Representatives. Equity index futures are soaring overnight as Treasury debt securities sell off in response.
The procedural vote will allow the body to actually vote on the House bill itself, probably later today (Monday). Assuming changes are made to the bill, it will then be sent back to the House for passage so that both bodies have passed the same exact bill and at that point, it will head for the president's desk for an autograph and be signed into law.
On Sunday afternoon, the Senate Appropriations Committee released three supposed full-year funding bills that will cover veterans' issues, on-base housing, and issues concerning the Agriculture Department. In addition, thousands of federal firings would be reversed, and as far as I understand it, back pay would be ensured for those workers. The bill most likely to be passed, is not perfect, and is unfortunately, a bit lumpy. What will likely be signed into law, would indeed fund some parts of the federal government for one year, but others only through Jan. 30.
Republicans party senators have guaranteed Democratic party senators a vote by the second week of December on extending health care subsidies. This is what finally brought a handful of moderate Democrats across the aisle. There are Republican proposals as well, to allow some healthcare funding to be provided directly to households, into flexible-spending accounts rather than to insurance companies in order to help offset premium costs. Speaker Mike Johnson has put the House on notice that representatives would have 48 hours to return to Washington in the event that the Senate does pass an amended bill. The House has been on vacation, I mean in recess since Sept. 19.
First to Fight for Right and Freedom
Today is the day. For many, tomorrow is the day. Nov. 11, now Veterans Day, was originally known as Armistice Day, and has been a national holiday since 1954. The day recognizes all who have served honorably, regardless of what branch of the military that individual served with, and regardless of what was asked of them during their time. Nov. 10, though, is the Marine Corps Birthday.
You have already seen, earlier this year, the celebrations of the Army's 250th anniversary on June 14 and the Navy's 250th on Oct. 13. I don't knock those other branches. Not in the least. I even spent some time in an Army uniform (after a 22-year break in service) after being rejected by the Marine Corps during the War on Terror due to my age. I respect and honor everyone who has ever raised their right hand and taken that oath.
That said, as time has passed and the military has evolved, the Marine Corps birthday has always been more important to Marines than the other birthdays are to those respective branches. That's just the way it is. My father and one of my sons are Army veterans. I have some Navy in the family, too. I am the only Marine in our clan.
They just don't see the Army or Navy birthday as being as big a deal as we see our birthday. All day long, if you work with Marines, today you will hear them wishing each other "Happy Birthday." All day long you will see all of the Marines you know changing their social media profile pictures for today and wishing each other well. Dress blues. Probably boot camp pics. Kin for life.
You see, because we all permanently changed the day, we set our feet upon those yellow footprints at Parris Island or out in San Diego. That's its own rivalry that we won't get into here. You either did the swamps or the mountains in boot. I am a Parris Island Marine, but either way, from the day you earned that title, you had become something different. Only a rough 6% of all Americans have ever served in some capacity. About 0.8% of Americans have ever earned the title. We are, indeed, our own breed.
And to Keep Our Honor Clean
The place was literally a bar. Tun Tavern. Nov. 10, 1775. Members of the Continental Congress met in the nation's de facto capital, Philadelphia, Pennsylvania and passed a resolution to raise two battalions of Continental Marines to attach to the Continental Navy. Samual Nicholas was named the nation's first Commandant of Marines.
There have now been 39 Commandants. I served under the 27th, 28th and very briefly the 29th. Dang, I'm old. The owner of the Tavern, Robert Mullan was immediately named the first captain of Marines and became the first recruiter in Marine Corps history. The Commandant that I most considered to be my Commandant was General Robert H. Barrow.
The man was a rock star to this 17-year-old private. He enlisted and went through boot camp at Parris Island in 1942. He started out as a private just like the rest of us. He was the last World War II veteran to serve as the top Marine. He operated in central China during the war teaching guerrilla tactics to nationalist fighters in Japanese occupied territory. He also participated in the Chosin Reservoir campaign and was awarded the Navy Cross for his actions at Koto-Ri in Korea in December of 1950.
Lastly, as a regimental commander, he saw combat at Khe Sanh in Vietnam and was decorated for his actions in Quang Tri Province in early 1969. Barrow was the first Marine to serve as a regular full member of the Joint Chief of Staff and finally retired from active duty in 1983 after 41 years on the watch. By the way, he retired in June of 1983. The bombing of the Marine Barracks in Beirut occurred on Oct. 23 1983.
Yes, I liked ballplayers as much as any kid back in my day, but I didn't lionize them. I have been fortunate to have walked in the footsteps of actual heroes. I have breathed the same air as giants. If you were a teenage Marine when I was a teenage Marine, Robert H. Barrow was a Marine to learn about and most importantly, to learn from. The general left us on October 30th, 2008. Rest in peace.
Happy 250th Birthday, Marines! Always Faithful.
The Week That Was...
Last week was rather ugly. In fact, for the Nasdaq Composite, last week was the worst week since early April. The AI / Tech trade continued to struggle as traders and investors took profits where they were most visible and from parts of the market where valuations were most extended. There was a sharp upside reversal on Friday, however, after another sharp selloff and after rumors of the Senate finally getting its act together hit Wall Street. This is how it went...
- The S&P 500 gained 0.13% on Friday but lost 1.63% for the week.
- The Nasdaq Composite lost 0.21% on Friday and 3.04% for the week.
- The Nasdaq 100gave up 0.28% on Friday and 3.09% for the week.
- The Russell 2000 gained 0.58% on Friday but lost 1.88% on the week.
- The S&P Smallcap 600 added 0.88% on Friday and gained 0.16% for the week.
- The S&P Midcap 400 gained 1.12% on Friday, losing just 0.1% for the week.
- The Dow Transports added 1.58% on Friday and 2.01% for the week.
- The Philly Semis surrendered 1.01% on Friday and a nasty 3.89% for the week.
- The KBW Bank Index added 0.63% on Friday and 0.61% on the week.
On Friday, nine of the 11 S&P sector SPDR ETFs closed out the session in the green, as five of those funds gained at least 1%. The Staples (XLP) and Energy (XLE) led the way back. Growth was punished as Technology (XLK) and Communication Services (XLC) were the two sectors left behind.
For the week, almost surprisingly, seven of the 11 S&P sector SPDR ETFs traded higher with Energy and Health Care (XLV) leading the winners. Again, Technology at -4.16% and Communication Services at -2.35% were punished. Within the tech sector, you already know that the Philadelphia Semiconductor Index gave up 3.89% for the week.
You probably don't know that the Dow Jones U.S. Semiconductor Index was damaged for a gnarly looking 5.69%. Lattice Semiconductor (LSCC) was slapped around for a loss of 12.98% over the five days, with Advanced Micro Devices (AMD) and Nvidia (NVDA) giving back 8.82% and 7.08% respectively. Yes, I am long those two. Additionally, the Dow Jones U.S. Software Index took a 4.9% hit for the week as CoreWeave (CRWV) was bludgeoned for a loss of 22.21%.
The Chart...
Readers will see that the S&P 500 had put in bearish Day One reversals of trend on Oct. 9, Oct. 22 and also this past Thursday, Nov. 6. The first two reversals failed, and right now I would have to say that last Thursday's bearish reversal will fail as well. I did tell viewers on Charles Payne's TV show at Fox Business that I did not want to be long defensive sectors going into the November / December season. Just an aside, I will be appearing on Liz Claman's show at Fox Business tomorrow as part of her annual Veterans Day special.
What I want readers to note about this week's Monday morning chart is the Friday candlestick in isolation. That is what is known as a "Hammer Doji" and is reflective of a sharp upside reversal after an early day selloff. Some of us playfully call this a "Hammer Goji." This is one of the most bullish one-day signals we have in our technical arsenal. It certainly appears on Monday morning as we work our way through the zero-dark hours that this hammer, which developed after the S&P 500 had put its 50-day Simple Moving Average to the test, will prove prophetic. That would show just how strong portfolio-level support is at that level.
As far as the indicators are concerned, Relative Strength will enter the week bearing a neutral posturing that should improve once the opening bell rings. More importantly, below the chart, we have a pretty bearish daily Moving Average Convergence Divergence. For this early Monday rally to truly have legs, we need to see the histogram of the 9-day Exponential Moving Average move back above the zero-bound and we need to see the 12-day EMA (black line) move back above the 26-day EMA (gold line). With the shutdown coming to an end, we hope, economic activity and by extension, our financial marketplace, can get back on track.
Earnings
According to FactSet, for the third quarter, with 91% of the S&P 500 having reported, 82% of those companies have pleasantly surprised on earnings (down from 83% last week with 64% of companies reporting) while 77% of those companies (down from 79%) have surprised in the right direction on revenue generation. The impressive performance this earnings season and increased guidance in general, has boosted the blend of Q3 earnings results / expectations for the S&P 500 all the way to growth of 13.1% from 10.7% last week and from just 8% several weeks ago.
Revenue growth expectations now stand at 8.3%, up from 7.9% last week and up from 6.3% several weeks ago. For the full calendar year of 2025, Wall Street now sees S&P 500 earnings growth at 11.6% (up from 11.2%) on revenue growth of 6.8%, up from 6.6% last week.
Back to the quarter, Technology, the Financials, the Utilities and the Materials have all been outperformers with blended earning growth of 20% or more. Three sectors are still running at a year over year earnings contraction led to the downside by Communication Services.
Valuation
Still using data provided by FactSet, aided by still improving forward looking guidance, but damaged by last week's sell-off, the S&P 500 ended last week trading at 22.7-times 12 months' forward-looking earnings, down from 22.9 times a week ago. This is still well above the five-year average of 20-times for the index as well as its ten-year average of 18.6-times. The S&P 500 also ended last week trading at 29-times trailing 12 months' earnings, down from 29.3-times a week ago. That also stands well above the five-year (25.1 times) and 10-year (22.8 times) averages for the index.
Ten of the 11 sectors are still trading above their five-year average valuations, led by Tech (30.4-times) and Consumer Discretionaries (29.7-times). Only the REITs (17.4-times) are not historically overvalued relative to their five-year averages.
The GDP Game
Last week, the Atlanta Fed actually revised their GDPNow model for the third quarter up to growth of 4.0% from 3.9% (q/q, SAAR). Among other regional central bank district branches running close to real-time GDP models, the New York Fed's estimate for Q3 growth was revised lower from also growth of 2.35% down to 2.31%. The Cleveland Fed's model for the third quarter was actually revised upward for a second-straight week, from growth of 2.0% to growth of 2.05%. The St. Louis Fed model remained unrevised at growth of 0.59%. I would imagine that these estimates will start moving around a lot more erratically should floods of economic data start hitting the tape in bundles over the rest of the week.
Fed Funds Futures
Fed Funds futures trading in Chicago are now pricing in a 65% probability for a quarter-point rate cut on Dec. 10, down from 74%, a week ago. At present, there is now just a half point worth of additional rate cuts fully priced in (69% chance, down from 73% a week ago) for all of calendar 2026. The number of cuts for 2026 is in line with last week though the likelihood of those cuts appears to be in decline for two weeks running.
On The Docket...
There are not a lot of earnings releases scheduled for this week. How much macroeconomic data we see depends on our elected officials.
... The Fed will be out in force again this week. Right now, I am tracking at least nine public appearances to be made by Fed officials this week with five of those appearances on Wednesday. The headliners would be Fed Gov. Christopher Waller and Fed Gov. Stephen Miran on Wednesday. Waller is a candidate to succeed Jerome Powell as Fed Chair and Miran is a recent Trump selection and has been overtly dovish. Cleveland Pres. Beth Hammack will speak on Thursday. She, like her predecessor in Cleveland, has taken over as group leader on the hawkish side of the football.
.... As long as the government shutdown continues, the macroeconomic calendar will remain light. Once the government reopens, trying to track all of the data will almost certainly overwhelm economists, but only the most recent data will matter to traders. I kind of hate when this happens. I would not be surprised to see an absolute deluge of data hit the tape this Friday.
..... The earnings calendar will be rather light this week. This is the week after most of the S&P 500 has reported, but also the week ahead of when most of the well-known retailers start going to the tape. Of course, for retailers, this particular quarter is more "guidance" season than it is "reporting" season. That said, we do have some high-profile companies set to publish numbers this week. This evening, Rigetti Computing (RGTI) goes to the tape. Oklo (OKLO) will report tomorrow afternoon. On Wednesday, we'll hear from Circle (CRCL) early and Cisco Systems (CSCO) late. Finally, on Thursday, the Walt Disney Company (DIS) will bat lead-off, while Applied Materials (AMAT) bats clean-up.
Don't forget...
This Friday, Nov. 14, 13F filings are due.
Economics
(All Times Eastern)
No significant domestic macroeconomic data scheduled for release.
The Fed
(All Times Eastern)
No public appearances scheduled.
Today's Earnings Highlights
(Consensus EPS Expectations)
Before the Open: CART (.50), MNDY (.88), (TSN) (.83)
After the Close: (OXY) (.49), (RGTI) (-.04)
At the time of publication, Guilfoyle was long AMD, NVDA equity.
