Market Insights

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S&P Overview: No Clear Signals Yet

• Momentum still very bearish, with no clear sign yet of longer-term bottoming.
• June low of 2692 is level to watch for rebound.
• Risk of continued selling toward 2540-2600 zone, near low for 2018.
• Selling strength (not weakness) is easiest approach.
• Oversold squeezes like 10/23 or 10/25 should also be expected.
• Few positives in economic trends or event calendar.
• However, near-term bottom potentially forming after Friday doji, Monday outside day.

Charting Ideas for Volatile Market

• Always map out key levels. When betting on reversal, try to combine a level with at least one oscillator. For example, peaks of 10/26 and today around 10/23 low. Turns signaled by stochastics and/or MACD.
• Continue to watch 50HMA for sense of direction on @ES.
• For short-term pivot entries, SPY 50-minute MA turns can be useful.
• Play ranges and have discipline not to hope for break.

Volatility in Focus: It Pays to Think Big

• In September, SPY options usually accounted for about 10-12% of total market volume.
• Since October 4, it’s been 15-20% of total options market activity.
• In September, SPY was only ETF in the top 10 symbols for TradeStation clients.
• In October, 5 of 10 busiest symbols at TradeStation are ETFs.

Don’s Watch List

• Coca-Cola (KO), Under Armour (UAA) report tomorrow morning
• Facebook (FB) reports tomorrow afternoon.
• Kellogg (K) reports Wednesday morning
• Exxon Mobil (XOM) reports Friday morning.

Economic News Less Inspiring

• GDP beats but business investment slows.
• Rail traffic, an accurate indicator, slows.
• Fed hawkish: Kaplan, Clarida, Mester, Bostic
• China industrial profits, factory output languish in September.
• In response, $$ shifts to “safe havens” like utilities, consumer staples. Money flees “risk-on” sectors like industrials, techs, materials, energy and chips.

“Growth” Ailing on Many Fronts

• AMZN, GOOGL miss! Click here for more earnings news.
• Semiconductor Industry Association: September chip sales weakest since December 2016. AMD, TXN, TSM hammered.
• Biotech, medical devices sold aggressively this month.
• FDC crash, PYPL lackluster after beat. Are electronic payments at risk?
• Susquehanna: No more silver lining in the cloud?

New Rivalries in Tech, Consumer Discretionary

• AMZN attacks GOOGL/FB in advertising space.
• Target (TGT) challenging AMZN Prime Day.
• MSFT challenging AMZN’s AWS.
• Twitter (TWTR) potentially taking market share from FB
• Read Market Insights for more in coming weeks.

Russell’s Watch List

• 10/25: BHGE Jan 27-23 bearish put spread (45K contracts)
• 10/29: PG Jan 77.50 calls → April 95 calls (20k contracts)
• Philip Morris (PM) trying to break 200-day MA.
• Big pharmas trying to hold: PFE, JNJ, LLY
• DAL, UAL have upside potential after strong numbers, oil decline.
• Oil servicers like HAL, RIG, DO, ESV, BGHE likely have more downside risk.