October 2, 2020
STOCKS โ NONE
Macro โ SPYย
Mikeโs Reading The Markets (RTM) Premium Content โ NOW WITH A 2 WEEK FREE TRIALย
- Bearish Pattern Persist, Lower Prices Likely -Midday
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Stocks fell today in a rocky session, with the S&P 500 trading lower by about 1%, while the NASDAQ 100 fell by over 2.8%. There was a modest rotation today out of technology into some sector that might benefit from another stimulus. Whether or not a stimulus comes from Washington is yet to be seen.
The latest jobs data was a bit of a disappointment, with the headline non-farm payroll missing estimates. More concerning to me was the unemployment rate, which fell, but only because the labor pool shrank, and because more people left the workforce. A trend that is not moving in the right direction.ย
The importance of today’s move lower should not be underestimated. The S&P 500 was stuck below the 50-day moving average all week until it managed to break above it on Thursday. Then quickly, on Friday, we traded right below that moving average, a rejection of the previous days advance. Additionally, we fell out of the rising wedge, bear pennant pattern I had noted on Thursday.ย
The pattern is bearish and suggests that the index likely has further declines that lie aheadโmore this weekend.
Have a good night,ย
Mike
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