Daily Commentary: October 21, 2025

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Overnight Earnings Were Good

Posted by Pete Stolcers on October 21
www.oneoption.com

This week we will hear from many sectors and that will provide us with clarity.

PRE-OPEN MARKET COMMENTS TUESDAY – The big tariff related market drop from two weeks ago is gradually being reversed. Scott Bessant is going to meet with his Chinese counterpart in Malaysia to continue trade negotiations. The US is threatening to increase tariffs by 100% in response to China restricting rare earth exports. If history repeats itself, the rhetoric should be cordial.

These talks could go either way and investors seem less concerned with a trade war than they were six months ago.

Rumor has it that politicians are starting to discuss healthcare. I still believe that Republicans want to pass a clean CR, but this will pave the way for negotiations into year end. Based on the major media coverage, it seems that Democrats are being blamed by voters for the shutdown. They risk hurting their election chances in 2026 if this drags on.

These outcomes will impact the market, but for the time being, investors are not concerned. Stocks are recovering and the SPY is within striking distance of the all-time high. Seasonal strength starts now and Asset Managers typically support the market into year end.

Earnings season has started off on a good note. The overnight reactions (GE, GM, HAL and KO) have been good. NFLX and TXN report after the close today.

Overseas markets were marginally higher and there is a slight tailwind. Yesterday the market gapped up and it ran higher for the first 90 minutes and compressed. The overnight news was supportive of a move higher, but the bid will be tested early. If the gains from Monday hold for the first hour, we can expect a grind higher.

Support is at AVWAPQ and resistance is at the all-time high.

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