‘Worry-wall climbing’ has characterized this market since anticipating an effort by the S&P and NDX to dig themselves out of a hole 2 weeks ago (after the breakdown which triggered algo-selling and pessimism in late October).
FreepikThis so far is a ‘mean reversion move’, but can be more if prayers at that other ‘worry wall’ (actually the Wailing Wall in Jerusalem) are met with victory, and absent significant intervention by hostile neighbors like Hezbollah / Iran.For those who would like to estimate ‘what event’ will cause Israel to pause, it might be what a senior Israeli military source says about this: “it will not end until we reach the command bunker of Yahya Sinwar and Mohammed Deif “, referring to the top Hamas leader in Gaza and the chief of its military wing. At this point Israel is in Central Gaza City and if they didn’t flee, we shall see.
‘Worry wall’ isn’t flippant or even overly cute about the nature of recent S&P action, although for sure the initial massacre by Hamas as well as everything following, contributed to an-already-heavy market that tends to be repressed in the September/October period. . . emerging thereafter ‘if’ backdrop allows.The Israeli army surrounded Gaza City after advancing from land and sea (a modest amphibious landing perhaps also part of the) advances. So, the IDF is moving fairly rapidly toward Hamas headquarters in the heart of Gaza City, as there is some fear that eliminating the group’s leadership would require more time than what Israel can afford. I think not unless they already escaped. And after they’re finished with the leadership ‘in’ Gaza, they need to ‘look at’ Qatar.(After this campaign Israel may fallback on ‘selective’ justice for terrorists…in the spirit of Mossad operations that gained notoriety and respect in the past, as I recall hunting ex-Nazi’s, the Munich Olympic murderers, Black September or so on…so maybe we’ll see variations of that if things don’t settle down.)
Israel’s vision of victory over Hamas is simple: assassinating or capturing the organization’s entire military (and political… Qatar too?) leadership, killing the planners and if possible most perpetrators of the Oct. 7 massacre in southern Israel, eliminating all Hamas firepower arsenals, and denying the organization any ability to run the Gaza Strip or maintain its sovereignty there.I recognize that the argument will be made (is being made by countries even like Malaysia, in which Islamists from Saudi Arabia funded madrasas for years to indoctrinate the youth, hence why they are more biased against everyone’s beliefs outside of Islam, than some other countries bereft of hateful teaching. I am noting Kuala Lumpur said you can’t defeat an ‘idea’. Well ok, but there are still Nazi’s in the world and some communists in every country, but it doesn’t mean they command any force or are able to do more than disruptive attacks, which can be horrible and hateful, but don’t result in overthrowing nations. 
Market ‘X-ray’We retain a view of neither ‘running from or running to’ this recovery effort. It was normal, likely hinges on geopolitics (avoiding a wider war) as well as ‘yields’ and the projected Oil price retreat (which it seems we were along looking-for a return to a 75-85 trading range).Now we’ll see if S&P can hold together as it digests the move. Seasonality for sure supports our perspective, but there’s more than that at-play these days.By the way you may already know that Israel’s working with Egypt to facilitate ‘field hospitals’ that will be set-up (perhaps already assembling) in Sinai and in Egypt (UAE & Jordan helping) to take care of wounded refugees from Gaza.So this is interesting as Nasdaq took-out the declining tops pattern, as S&P is trying too. The restrain on the Energy Sector inhibits the Index, but matches our expectation of fuel costs coming down, and not having super-high Oil. As Oil is back into our desired 75-85 trading range, that’s better for consumers, it even pleases China, who will be meeting with our top officials next week (that is in San Francisco and includes dinner with business executives).. and might note that it denies even-higher prices for Oil sales by Iran and Russia too.Most cannot recall a year where the Nasdaq mega caps weren’t the leaders of rebounds off seasonal lows. Sure other areas will try to kick in but not catch fire since accumulation for 2024 battles shuffling and tax-selling for this year. Other stocks play second fiddle and not much will happen unless mega cap tech leaders are moving higher and drag them along in a secondary manner.All of this is still subject to avoiding ‘black swans’, red flags (in deference to all the top CCP leaders coming to San Francisco it appears). Now if you get new Agreements, like renewal of military ‘disengagement’ hotlines and discussions that are taking the edge off stress with China, that would enliven smaller tech stocks that rely on China, whether as a source or as a customer (or both). For sure that might only be temporary but would help in the current situation. Meanwhile . . . Interesting results (positive operating cash flow) from long-held and beleaguered (stock price) BigBear.ai (BBAI), which I was hoping would be better and emphasize the merger/acquisition announced yesterday. I made a remark that it should help the Airline and Homeland Security areas, and today CEO Mandy Long highlighted that in her Letter to shareholders. It seems the previously planned ‘conference call’ was skipped, but the gist if clear.. they’re moving forward and I concur about the integration of services for customers.The combination of the two small companies will create one of industry’s most comprehensive Vision AI portfolios, combining facial recognition and advanced biometrics with BigBear.ai’s computer vision capabilities so as to spearhead the Vision AI industry. This will position the combined company as a foundational leader in what CEO Long described as one of the fastest growing categories for the application of AI.
The acquisition: Pangiam Intermediate Holdings, a McLean Virginia-based facial recognition and biometrics solutions provider for the trade, travel and digital identification industries, in a $70 million, all-stock deal. Remember as of next year and the following, both the EU and then USA will be requiring an update international travel procedure (an electronic visa for EU but not UK yet and probably not Latin America yet), but ‘real ID’ (or similar) in ‘domestic’ US flying, and that’s a first. All this aims to expedite travel and simplify security, and after my 2 hour ordeal at JFK last month, I say it can only ease travel.Bottom-line: Views ‘benign digestion’ as how many traders describe overall behavior today and it was, just shy of or around key resistance for S&P. At the same time the breakaway gaps (Summation Index) combined with soon-to-be overbought Oscillator, hints at exhaustion of the current anticipate revival, but (if we don’t get geopolitical disaster) holding higher lows on pullbacks, then up more. Yes it can become rocky, but this was not expected to be just a one-hit wonder, hence suggesting not running after the move, but holding some likely bargains bought around their lows of the preceding couple weeks.
More By This Author: Market Briefing For Tuesday, Nov. 7Market Briefing For Monday, Nov. 6 Market Briefing For Thursday, Nov. 2
