J.D. DURKIN: Good morning, Action Alerts Plus subscribers. We are back for another busy week ahead. Let's welcome in, of course, the man himself, Chris Versace. Chris, thanks for being here as always. I do want to begin with a bit of a scene setter. This is the beginning of the week so we want to set the scene. We got our first round of economic data following the Fed's decision last week. Is the rally we saw, Chris Versace, justified? What do you think?

CHRIS VERSACE: Are you talking about the short-covering, very much oversold market rally that we saw last week? That one?

J.D. DURKIN: We did go into oversold. Yeah, talk to me about it.

CHRIS VERSACE: Yeah so look, I mean, clearly exiting last week. The market was in pretty much a feel-good mode, bouncing off very oversold levels. Good news for the portfolio. Good news for investors. But the question we have to ask ourselves is, wow, that was pretty far, pretty quick. We know we passed through some technical resistance levels-- the 50-day moving average, for example, S&P 500, NASDAQ.

But we do have the next layer of technical resistance ahead of us. I touched on this in Friday's roundup. It's about 1% ahead of where we closed on Friday for both the S&P 500 and the NASDAQ Composite. So to put it into context, J.D. , last week's move higher, as much as we liked it, it was kind of like, OK, thanks, great.

The question is, what is going to drive the market higher from here? We see the earnings season continuing this week. We don't really have a tremendous amount of economic data. But we will get not only Fed Chair Powell talking this week, but several other Fed heads. They will need to confirm what a lot of people are thinking, which is that last week's economic data-- again, the weaker-than-expected PMI data as well as the weaker-than-expected October employment report-- tilts the Fed even more so to being more neutral than they have been, i.e., supporting what's being called the Goldilocks narrative for the market.

If they get that and we move through the current resistance level, that would be a good thing for the market. But my sense is there's a lot of concern about whether or not we will. Again, we've moved very far very fast. So with the portfolio for the next day or two, at least until we get the Fed speakers, we're going to take a beat. We're going to wait, look for confirmation, and then make our decisions from there.

J.D. DURKIN: And there's certainly a busy week in terms of Fed speakers or Fed heads, as you affectionately refer to them as. We will hear from Chair Powell on both Wednesday and on Thursday of this week. I do want to get your take on earnings. Earnings season is starting to wind down here, Chris, but last week was a busy one. Apple was your main focus heading into the week. How are you feeling now?

CHRIS VERSACE: Well, let me just say this, J.D. . You are right that we are kind of in the later innings of the September quarter earnings season. But before we get through all of it, we're going to start to hear from retailers. And that's going to be a very big thing because we're right at the mouth of the holiday shopping season. And in fact, I would say we're even in the mouth of the holiday shopping season, just given some of the things that I've seen.

But in terms of Apple, look, we've been sitting with a 2 rating on Apple. We've been wanting it to pull back. What we heard about the outlook for the current quarter, you know, good, not great. I think the innards of the guidance were probably better than what people were hoping. But the big issue with Apple, at least in the near term, is, where is the inflection point for the company returning to year-over-year growth?

There's some thoughts on that. Maybe it's Vision Pro. Maybe it's a full quarter of the new iPhone models. Maybe it's the upcoming refresh that we'll see for iPads. So there's a lot of moving pieces here from our perspective. We're going to do what we do-- stick to the data. That means that we're going to want to hear what its key suppliers have to say as we go through earnings but also what Taiwan Semiconductor has to say.

Remember, they're a big, big partner for Apple, not just in iPhone but in Max as well. We're going to want to monitor their monthly revenue reports. And we should be getting the next one later this week. If we see nice confirmation that yes, the smartphone business is ramping, we'll become incrementally bullish on Apple. And by the way, that's also true for Qualcomm, which is also a big TSM partner.

J.D. DURKIN: All right, so let's turn the page to this week here, Chris. We do have Axon reporting earnings. That's tomorrow. What will you be following there?

CHRIS VERSACE: Well, the setup for Axon's report from Motorola Solutions last week was really positive. Great order growth, rising backlog, they lifted their guidance for 2023 and gave preliminary guidance for 2024 that were all positive. And remember, Motorola Solutions-- public safety, really benefiting from the uptick in that spending. And they talked quite a bit about the landscape for federal spending but as well as state and local.

So that sets what I would say is a very positive outlook for what Axon should report on Tuesday after the close. Specifically inside of Axon, we're going to be watching the continued growth in recurring revenue. We're also going to want to look for that margin expansion as it continues to see its mix favor not only that recurring revenue, but also increasingly moving into the cloud.

J.D. DURKIN: OK, let's talk Coty. How about that name after those reports from Estée Lauder and e.l.f. last week as well? What is top of mind for you there, Chris?

CHRIS VERSACE: Well, I think the important thing that we pointed out last week regarding Coty is that the problems that Estée Lauder in particular was facing-- skincare as well as travel-related demand principally stemming out of China, weakness in that market continuing-- those are not issues for Coty. What was important for Estée Lauder-- and we heard this also from LVMH. We heard it earlier in the quarter from Interparfums as well-- is that fragrance and perfume continues to be strong.

And remember, that's 60 plus or minus Coty's overall revenue stream. So that speaks very, very well for their earnings heading into the holiday season. They're not strapped with leather goods, jewelry, and all these other things that these luxury conglomerates have. So it really sets Coty's business apart.

I think we're going to see a good print. I think we're going to learn more about their latest products going into the holiday season. We're also going to see some margin improvement at the consumer beauty business. And my sense is that we could see some upside guidance going into 2024 for the company.

J.D. DURKIN: All right. Finally here, Chris, it does seem to be a little bit of a slower week in terms of major data-point drops-- the little things that we circle on our calendar that we talk an awful lot about. So where will you be putting your attention in the next few days instead?

CHRIS VERSACE: So as we talked, we do have a barrage of Fed heads, as we like to call them. But outside of that, at 3:00 PM today, we're going to get the SLOOS report. And that's going to be important. It's going to update us on bank credit conditions, what we're seeing in terms of loan activity. We'll be paying close attention to that for not only the speed of the economy, but also for some insights for our Bank of America shares as well as Trinity Capital.

We'll also get the latest consumer credit report. And we've seen spending hold up better than expected, but we've seen the savings rate continue to move lower. This report will likely confirm consumers continue to take on more and more credit. We know that credit card rates are high. Auto loan rates are very high. This is going to fuel our concern about disposable income and potential spending for the holiday season.

I think, if we see what we expect, It's going to reinforce our position most likely on Costco, Amazon, and yes, McDonald's.

J.D. DURKIN: Yeah, well, the holiday shopping season is certainly here. And if there was any question to it, we've all seen the many commercials that have already started airing on our TVs. Whether or not we want them to a different story. We'll have to leave it there for today. Chris Versace, thank you as always. Yep, real quick to wrap. What have you got?

CHRIS VERSACE: I was just going to say, J.D. , that the other sign that confirms we're in the holiday shopping season-- holiday cups at Starbucks.

J.D. DURKIN: The red holiday cups at Starbucks are here, folks. Ring the bells. Chris Versace, thank you as always.

CHRIS VERSACE: Thank you, J.D. .

J.D. DURKIN: All right, folks, and as a final programming note, while you drink your Starbucks holiday cups, of course, our next will be live this Wednesday, November 8 at 12:00 Eastern. Have a great trading day. And we will see you again soon.