Analysis: DE

In today's Action Alerts PLUS Daily Rundown, Bob Lang and TheStreet's J.D. Durkin discusses the technical landscape, the latest manufacturing data and the FOMC minutes ahead of the Thanksgiving holiday.

Bob also takes a look at Deere (DE) after the equipment-maker bulldozed earnings expectations.

J.D. DURKIN: Good morning, and very happy Thanksgiving Eve, Action Alerts PLUS subscribers. I'm TheStreets, J.D. Durkin, talking with Bob Lang here from the floor of the NYSE. Bob, nice to see you here. So as we head into tomorrow's anticipated Thanksgiving holiday, how is the technical landscape itself shaping out, especially considering the S&P closed above 4,000 for the first time in 10 weeks at the end of yesterday's session?

BOB LANG: A little surprising to see that move above 4,000 here, J.D., but we had been talking about recently this narrow range between 3,900 and 4,000 for the past couple of weeks. And it seemed like a breakout above 4,000 with a confirmation day the following day or a break down below 3,900 with more confirmation was going to give us some clues as to what direction the market was going to go into.

So clearly, this move above 4,000 was important for, especially for the bulls. And we see the 20-day moving average, which is sitting just below the 3,900 level, it's about 3,080, 3,081 right now, J.D., and if it, it's been coming up quickly, and in a few more days, it will be above that 3,900 level.

So that will fortify that 3,900 spot as some really good strong support. It'll make it even more important for the bulls if we do get a pullback down to that area. So you know, of course, we do have seasonal bullish trends right now, and that means that buyers are pretty active.

J.D. DURKIN: Yeah, right now as we're having this conversation, the index is a bit above 4,000, but we will continue to very closely follow it. Let's talk a little outlook going forward. Is there a particular S&P range that you're watching, Bob?

BOB LANG: Yeah, so as we close above 4,000 again, if we if we finish out this level at the end of the day here and into the short trading day on Friday, I'm looking at 4,060, J.D, which is the 200-day moving average on the S&P 500. And that matters to big players in the market. And why is that?

Decisions are made at that 200-day moving average. And what decisions are made? Whether to buy or whether to sell. And as we see the markets advance to that level from below, which is where it's coming up right now, we'll see big size investors either take chips off the table, probably still do that, and or start buying if we get a breakout above that 200-day moving average.

But as we saw last time, the S&P 500 made a run towards that 200-day moving average back in August and in April. We're wondering if this is going to be that momentous breakthrough that people have been hoping for. However, you know what. We just have to understand that this is still a bear market until further notice. So we're a little less optimistic of a breakout lasting for too long before the sellers actually take over.

J.D. DURKIN: It's still a bear market until further notice. Very well said. Nice, very tightly packaged there context, I appreciate. Let's talk about that manufacturing data from S&P Global we just got it at 9:45. The fall in activity was the second fastest since May of 2020. How is the contraction in business activity impacting your thinking, Bob?

BOB LANG: Well, it has this a little bit of concern into 2023. But clearly, the market doesn't seem to care right now. So are we moving into this phase where bad news is good news for the markets? It could be so. Certainly again, as I mentioned earlier, seasonal bullish trends are upon us right now, and will be there until the end of 2022 and into the early part of 2023.

So buyers want to pick up stocks and ignore the poor economic data. That's going to be a danger sign going forward. Volatility again, is down a little bit here, around 21%. And it's down sharply over the past 5 and 1/2 weeks. So it just tells us, J.D., that regardless of the poor economic data that's been coming out, people are showing a little bit less fear in the markets believing that the markets are going to go down.

J.D. DURKIN: Yeah. Later on this afternoon we will also get the Fed minutes from the month of October, which is just another wonderful data point for us all to pore over into tomorrow's holiday. Anything in particular that you're watching? And what more can we learn? We already know what the decision was, but what can the minutes tell us?

BOB LANG: Well, the last few times the minutes were released, J.D., the markets were extremely volatile. But today, we see the VIX down near 22%, which is implying that there's not going to be any large movements up or down regardless of what the minutes, meeting minutes say to us today.

We saw recent levels of buying dried up and markets resumed a corrective phase after the last two times the Fed minutes were released. But again, as I'm going to go back to this one, the forces of seasonal bullish trends are strong right now. They're upon us, and will be until the end of the year.

So regardless of what the news says, if the Fed is coming out and saying yes, more rate hikes and higher rates for longer, they're going to be, I'm sure they're going to be reiterating the same theme that they have been for the past couple of weeks. Of course, remember something, that these minutes do not include that CPI and PPI data, which came out after that meeting when the markets soared towards the beginning part of November.

So we won't have that data this. This data is about three weeks old, so it's a little bit stale. But still, it's interesting to see and hear what the Fed governors are thinking at that moment, and perhaps maybe over the next couple of days, we'll hear something, something different from some of the other speakers.

J.D. DURKIN: Yeah, of course, because as soon as a Fed representative speaks, we all very closely listen, maybe a little too closely from time to time. Finally, we did hear from the folks over at John Deere this morning. Blew expectations out the window, or bulldozed expectations, if you will. What's your main takeaway from the folks at Deere?

BOB LANG: I love it, bulldozed. They really hit the ball out of the park here, J.D. Strong earnings on the top line and the bottom line. They guided revenue higher, and their earnings as well too. And we see the stock at or near all-time highs for John Deere. Now this is a stock that we got into in the early part of October of 2021.

So we've been in the name for a bit over a year. It was one of the first names we added to the portfolio probably in the low 300s way back when we first got started with Action Alerts Plus, a little over a year ago. So they beat, again, they beat across the board and raised guidance for 2023 and beyond.

They're taking share from competitors, finally having some good pricing power as well, J.D. This has been really basically a theme of recently non tech Action Alerts Plus holdings that we've had that have been reporting this earnings season. And we continue to view this as a bullish outlook, as something to consider in 2023.

J.D. DURKIN: Thanks a lot for your insights today, Bob, and I wish you the very best to you and your family for an amazing Thanksgiving. Thanks a lot.

BOB LANG: Happy Thanksgiving to you too, J.D.

J.D. DURKIN: All right, and to all you members watching at home, that is a wrap. We will be back with a whole other rundown on Monday, November 28 for a busy week as we eye results from the weekend shopping, as we assess the impact from a potential railway strike, and of course, get ready for Fed chair Jay Powell. Have a wonderful holiday. Thanks, folks.