Stock Market Weakness Clouds Outlook As Election Approaches

The Market Forecast is showing some weakness just a couple of days after showing signs of starting a new bullish intermediate (green line) run. This suggests that the stock market’s parabolic move on Monday that appeared to see several breakouts take shape may have been a head fake.

If true, the stock market would remain stuck between the early September high and the late September low.

Other oscillators are also breaking back below bullish levels and showing a lack of momentum. This suggests either we bounce right back up and continue the new bullish trend or, more likely, we are still in the midst of the September pullback only briefly interrupted by the past few weeks’ gains.

Volatility continues to slowly grind higher as the VIX Volatility index pushes up. This is similar to the 2016 election pattern where volatility really started to move after October expiration and finally peaked the days before the election.

A large intraday volume gap in NASDAQ 100 after Monday’s opening gap and intraday parabolic move appears to be pulling large cap tech stocks lower by the end of the week. High gamma exposure confirms the rising volatility.

While small-caps stocks started this recent move higher, tech stocks appear to have punctuated the move. Their leadership is also prevalent during the past two days’ weakness where the NASDAQ continues to outperform.

Technology and Communications Services are not showing the strength on their respective Market Forecast, which doesn’t help confirm the bullish trend either.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Stock Market Video for Trading Into October 15, 2020

Twitter:  @davidsettle42  and  @Market_Scholars

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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