October 19th, 2023
The bears are currently in control of the market, but in the bigger picture it is a two-way tape. It’s important to note that interest rates are rising across the board. The 30-year rate is above 5% and the 10-year rate is approaching 5%. This is not a positive sign for stocks. As I’ve mentioned before, interest rates dictate market direction. When rates rise, stocks tend to have a bearish bias, overriding short-term technical indicators. Keep an eye on gold and oil as well, as they can indicate any escalation in the Middle East conflict. Currently, both markets are trading within their normal range of volatility.
Here’s my plan for today: I’ll be looking at my 3-minute chart with VWAPs and standard deviation lines. The bears will face their first challenge in defending the range of 4356-4363 this morning. If the market reaches that level, I’ll consider short-selling. If we sustain trade below that range, we could potentially head down to the 4325-4315 area, although it may be a volatile journey. I anticipate some resistance from the bulls around 4341-4335, and the market could be highly volatile today.
If we manage to surpass 4363, there’s a possibility of a rally up to 4377-4384. However, I won’t be a buyer during that rally unless interest rates start declining. I’ll be looking to short-sell again if the market reaches the 4377-4384 range. This is a crucial area for the bulls today, as a failure to break above it will likely lead to more sellers and downward momentum.
It’s important to emphasize that this is a highly unpredictable market, so it’s wise to trade with caution and keep positions small. Anything can happen in this environment, so avoid becoming too attached to any particular trade.