AlphaTrack – 20 October 2025

Thoughtful insights and approachable analysis.

Quick Market Overview

European stocks climbed Monday, with the Stoxx 600 up 0.8% as tensions lifted sentiment after last week’s banking worries. Banks led gains, Kering jumped more than 4% after selling its beauty unit to L’Oréal, and defence stocks advanced on renewed Gaza conflict. U.S. futures pointed higher and Asian markets also rose as Trump softened tariff rhetoric ahead of Malaysia trade talks. French bonds weakened after an S&P downgrade, while gold steadied and oil dipped amid lingering geopolitical risks.

General Market Health (SPX500)

• SPX500 EMAs are turning higher and may cross bullishly after Friday’s sharp drop on 10 October, which followed President Trump’s announcement of a 100% tariff on Chinese imports effective 1 November.
• The index’s RSI has moved above 50, indicating improving momentum. Sustaining this level would support further market strength.

Potential Trade Setup

Alphabet Inc. (GOOGL)

• GOOGL’s EMAs have crossed to the upside, signalling a bullish shift.
• The RSI has also broken above its downtrend line.
• If it holds above 50, this would confirm underlying bullish momentum that could push prices higher.
• $GOOGL fundamentals stay rock-solid. Q2 revenue jumped 14% to $96.4 bn, powered by Search, YouTube, and a profitable Cloud arm now above the $50 bn run-rate. Management’s $85 bn AI-capex push underscores long-term conviction, even if cash flow tightens near term. Analysts keep Buy ratings with constructive targets, while valuation remains reasonable near 26× forward earnings. Antitrust noise lingers, but AI and Cloud growth dominate the narrative ahead of Q3 results on 29 Oct 2025.

Morgan Stanley (MS)

• MS released its Q3 earnings before the market opened on Wednesday, 15 October.
• The results were well received, and the price formed a potential breakaway gap.
• MS’s EMAs have crossed bullishly, while the RSI has broken above a downtrend line and now sits above 50.
• If this level holds, it would confirm underlying positive momentum in the stock.
• Morgan Stanley delivered a standout Q3 FY2025, with revenue surging 18% year-on-year to $18.22B and EPS of $2.80, easily beating estimates. Equities trading jumped 35% and investment-banking fees soared 44%, signalling renewed strength in deal flow and capital-markets activity. Client assets in Wealth and Investment Management climbed, underscoring strong execution across its integrated model. Valuations now look richer after the rally, and future upside may depend on whether supportive market conditions, rates, trading volumes, and deal activity, hold. Morgan Stanley is firing on all cylinders, but cyclicality and macro risk remain key watchpoints.

Hot News, Cold Logic

Last week’s credit scare briefly jolted Wall Street’s relentless rally after warnings from JPMorgan’s Jamie Dimon and fresh loan disclosures from Zions Bancorp and Western Alliance reignited fears of hidden risks. Worries centre on opaque non-bank lenders, now behind a third of commercial loans, stirring memories of 2008’s credit excesses. Analysts caution that tighter lending could slow growth just as valuations stretch, with the S&P 500 trading above 22x forward earnings. Still, solid fundamentals and resilient sentiment suggest the bull market endures—though investors remain alert for the next “cockroach”.

Final Thought

Markets are rallying on optimism from surging earnings expectations and Japan’s stimulus-friendly political shift, even as trade tensions with China linger and France’s sovereign downgrade has stirred fresh caution around European credit risk.