S&P 500 futures are up by 0.8%, reaching
5855 points, with the index twice hitting record peaks at 5881 points this
week. This sharp rally puts the index on course for its next extreme targets at
6100-6200 points. Positive Q3 earnings from the banking sector and a standout
performance from Netflix are fueling optimism. Netflix’s Q3 revenue rose 15%
year-over-year to $9.8 billion, with an improved operating margin of 30%. It
also added 5.07 million new subscribers, beating the expected 4.5 million,
driving its stock price up 5.8% to $727 in pre-market trading on Friday.
These strong earnings have bolstered hopes for
similar results across the tech sector, with Alphabet, Tesla, and Amazon set to
report next week. A continuation of positive earnings could accelerate the
S&P 500's rise.
Other factors include the ECB cutting interest
rates by a quarter percentage point, while U.S. retail sales grew by 0.4% MoM
in September, surpassing expectations of 0.3%. Additionally, China's economy
shows signs of revival, further improving sentiment.
On the
negative side, Israel has killed Hamas leader Yahya Sinwar in Gaza
adding to escalation in the Middle East. Iranian proxy Hezbollah threatened to
escalate attacks against Israel. Gold prices surged higher updating its
all-time high on the news. Escalation in the Middle East is unlikely to stop
the rally in the U.S. stock market, at least during coming couple of weeks.
Positive sentiment from corporate reporting is strong enough to override any
geopolitical risks in the short run, probably excluding a full-scale regional
war. But this scenario is highly unlikely at the moment. So, the S&P 500 is
likely to hit its extreme upside targets.
From a technical
standpoint, the S&P 500 has achieved its initial target of 5700-5800
points. Having passed the potential reversal zone, the index is on track toward
the 6100-6200 range. The next resistance lies at 5890-5910 points, with support
at 5790-5810 points.
In the commodities
market, Brent crude oil seems to be retreating towards the support at $70.00-72.00
per barrel. However, geopolitical tensions in the Middle East make prices extremely
volatile. Thus, an upside scenario with targets at $89.00-91.00 should not be
discounted.
Gold prices, are
approaching the resistance at $2,710-$2,730 per troy ounce. If no significant
reversal occurs, gold could continue its rise towards extreme targets of
$2,850, with potential highs of $3,200-$3,300 per ounce.
In the currency
market, a real drama is unfolding. The EURUSD dropped by 1.0% to 1.08100, hitting
the lows straight after ECB meeting on Thursday. The pair is trying to recover signalling
a possible weakening of the Dollar If the pair accelerates to the upside it is
likely to return to 1.10000.