The S&P 500 closed lower by almost -1% on the week with the strongest sectors being XLY, XLK, and XLC. Cap weight performance has once again resumed it relative performance leadership as equal weight takes a backseat. This week will be a big earnings week with 5 of the Mag 7 reporting Q3 numbers (GOOGL, MSFT, AAPL, AMZN, META).
The U.S. election also continues to draw spotlight (insert a collective sigh as we all wait for this circus act to be over). Goldman Sach put out a note on the flows they are seeing as “election trades and expected market reaction, “the implied election move hit a new low with the market now pricing in a ~2% move compared to the 2.8% move it was pricing in at the beginning of October. Overall, we have not seen a ton of interest in buying index options for the election but rather sector demand in areas the candidates are expected to boost. In the case of a Trump victory, we see value in owning upsides in banks/ fins, while in a Harris victory we think upside in the renewables space is attractive.”
Summary of Models
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