Stocks Fall On October 2 As Downside Risks Build
Stocks fall on October 2 as technical trends begin to weaken.

Stocks Fall On October 2 As Downside Risks Build

October 2, 2020

STOCKS – NONE

Macro – SPY 

Mike’s Reading The Markets (RTM) Premium Content – NOW WITH A 2 WEEK FREE TRIAL 

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. 

(BLS.gov)

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. 

The pattern is bearish and suggests that the index likely has further declines that lie ahead—more this weekend.

Have a good night, 

Mike

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