The Fed hasn’t spoken about pause or pivot in any kind, yet the market rallied last Friday with heavy volume to put in a text book follow thru day that confirmed the October 13 low could be the seasonal low. As long as the October 13 low is held, the weekly cycle will proceed accordingly. Next week is a major earnings week that could further propel the Q4 rally.
Judging from reported earnings so far, Q3 2022 has not been as horrible as the sentiment suggested. The financial conditions have tightened significantly in a short amount of time, yet it takes time to affect the real economy and earnings. Therefore a decent Q3 earnings could give reasons for a bear market rally. This bear market is far from over in terms of time. The earnings recession has to run its course before the bear market is over.
Below is the S&P 500 daily chart. You can see October 13 is a major reversal day and October 21 is a solid follow thru day. The 200-day moving average at 4134 is the resistance for this Q4 rally.
We still hold Palantir PLTR position. PLTR suffered like every other growth stocks in this cycle, but Palantir product cycle is far from over, it is only in the beginning stage. Many winning stocks in one cycle may not be a winning stock in the next cycle. For example, Zoom stock may not participate in the next 4-year cycle. It all depends on Zoom product’s longevity. If Zoom can’t provide new products in addition to the Zoom video call, then the Zoom stock will not be a winning stock when the new bull market starts. The growth engine for Zoom is finished because Zoom video call product has reached all possible users during the pandemic.
Palantir has announced major contract wins in government and commercial sector recently. It is believed that businesses will spend more on software to remain competitive during tough times like now. Hertz rental car company just signed contract with Palantir to manage their 500,000 rental car fleet. This is a huge win for Palantir. It shows the power of the AI platform. The broad applicable use case of Palantir software is the ever green growth engine that could run for a few decades. We may add more PLTR down the road for core positions.