10/12/22 Your Morning Star & A Message From The Fed


Markets opened in the red on Tuesday. But by afternoon, all four indexes had climbed into positive territory.

As the closing bell neared, the Bank of England revealed the limitation of its bond-buying program. On this news, sellers took over.

image of the Bank of England's building with dramatic London Skyline in the background
Bank of England – Image from Investopedia

The indexes ended the day mixed, with marginal gains for the mega caps and small caps.

  • Dow Jones +0.1%
  • Nasdaq -1.1%
  • S&P 500 -0.7%
  • Russell 2000 +0.1%

Beneath the surface, it was a clear win for the bears. 60% of stocks fell, while just 36% advanced. 

The Nasdaq officially entered its second bear market of 2022.

Sector Round-Up

Only 3 of the 11 sectors ended the day higher.

  • Real Estate (XLRE) +0.9%
  • Consumer Staples (XLP) +0.8%
  • Healthcare (XLV) +0.5%

The losers outpaced the winners…

image of arrow pointing down
  • Finance (XLF) -1.3%
  • Technology (XLK) -1.5%
  • Communication (XLC) -1.9%

The remaining sectors ended lower but were off less than 1% each.


Behold the morning star…

SPY chart morning star pattern and falling support marked.
SPY Daily Candles – Chart via thinkorswim

Yesterday’s session revealed the 2nd of a three-candle bullish reversal pattern called the Morning Star. Here’s what to look for…

  • The 1st candle is solid red.
  • The 2nd candle has little to no real body, and the body exists entirely below the previous day’s real body.
  • The 3rd day should end at least halfway up the 1st candle’s body.

We saw a Morning Star pattern in June when the SPY put in a temporary bottom and rallied about 17% in two months.

The SPY needs to close above $362 today to complete the pattern.

Our other signals offer no alternate dialog…


At 2:00 this afternoon, The Fed will release the minutes from its September FOMC meeting.

At this point, it seems most of the Fed’s hawkish stance has been priced in. Still, be cautious near the release time. These news drops have created volatility in the past.

No additional surprises could be the catalyst to complete the Morning Star pattern.


*Low Float
^Open Position*BEAT on watch
*TC support at $4.50, resistance at $5.50
*^RELLsupport at $18
*RVPH support at $3
FNGR support at $6, resistance at $8
HROW resistance at $13, support at $11
IMUX on watch
ETNB support at $7.50
IMVT support at $9, resistance at $10
EVTL support at $10
DCPH support at $17
RVNC support at $28
XFOR support at $2
VIST support at $10.50
PRVB resistance at $8
ADEA on watch
HLIT support at $13
ARDX support at $1.40
CANO resistance at $9

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