Weekend Market Outlook: Volatility Stirs As Stocks Look For Lows

David Settle

There’s a lot to cover today regarding the stock market correction and time/price targets for a low to form. Let’s dig in.

The S&P 500 (NYSEARCA: SPY), NASDAQ 100 (NASDAQ: QQQ) and Russell 2000 (NYSEARCA: IWM) showing bullish clusters, which is a rare pattern for the major indexes and a long lower shadow on its daily chart. Today’s pattern shows a harami pattern and inside day with today’s range completely inside Thursday’s range – both reversal patterns

The S&P still has not formed a lower intermediate low (2700), though the Russell 2000 is down to its late April low after 4 consecutive clusters. The S&P 500 did drop sharply to its 200-day MA from strong long-term momentum levels. This pattern in the past has led to quick recoveries – especially in this seasonally bullish time of year.

The MACD indicator is hitting extreme lows that suggest a bottom may be forming. But stay on guard as High volatility points to big intraday moves early next week – both higher and lower.

The trading range and volume hit extremes that also suggest further downside potential is limited in the short term.

Gold is breaking out above resistance, which is a sign the dollar may not be able to maintain its recent strength and return to a longer-term decline. This is normal in environments where yields and commodity prices are rising.

Interest rate hike odds are similar to where they were a week ago despite this volatility.

Weekend Market Outlook Video – October 13:

Our bullish trade idea that takes advantage of the abnormally high volatility levels in a stock that was showing strength before the Wednesday broad declines started.

amgen stock chart analysis trading buy setup amgn october 15

 

Twitter:  @davidsettle42  and  @Market_Scholars

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