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10/7/22 Getting Sideways & Finding Acceptance

News:

Thursday was a down day on Wall Street. All four major indexes slipped modestly lower.

  • Dow Jones -1.1%
  • Nasdaq -0.7%
  • S&P 500 -1.0%
  • Russell 2000 -0.6%

The uptrend has not broken. The market has now moved sideways for a second day.

photo of a woman doing a side bend
Image from Shutterstock

Sector Round-Up

1 of the 11 sectors was green at the close…

  • Energy (XLE) +1.8%
    • The reduction in crude oil supply is the driving force here.

At the bottom…

  • Real Estate (XLRE) -3.3%
  • Utilities (XLU) -3.3%

These two sectors have been at or near the bottom all week.

Technicals:

The market can move in one of three directions. The choices are up, down, or sideways.

Chart of the SPY with described levels marked
SPY Daily Candles – Chart via thinkorswim

What we have here is a three-day rest period … sideways movement. 

  • It’s very common in bullish rallies.
  • After gains of 5%+, a pause in the action is healthy. 
  • The market is looking for price acceptance.

During these rest periods, each day’s range stays within the previous day’s range. 

  • Look at the S&P 500, that’s exactly what it’s doing.
  • A closer look reveals an ascending wedge pattern 
    • These result in breakouts more often than not.

Our other signals aren’t don’t provide any additional clues…

Timing:

The jobs report with the new unemployment rate will drop at 8:30 this morning. 

  • Right now, the strongest aspect of the economy is the labor market.
  • If that changes, we’ll reexamine our outlook.

Today we remain bullish and will continue to build our seasonal positions.

Watchlist:

*Low Float
^Open Position

*BEAT support at $5
*SOBR resistance at $3.25
*^RELL support at $18
FNGR on watch
HROW resistance at $13, support at $10
^SAVA support at $40
ETNB resistance at $7.50
IMVT on watch
EVTL support at $10
ALZN support at $1.40
DCPH support at $17
RVNC support at $29
XFOR on watch
VIST support at $10.50
FREY support at $14, resistance at $16.50
ADEA on watch
HLIT on watch
ARDX support at $1.40
CANO resistance at $9
SBS support at $11

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