Market Update Into 10/1: A Look Into the Month of October

2 mins read

A prepared trader is a profitable trader, and Sunday is a great day to get ready for the week ahead by studying up from last week’s price action. This weekend, we are focusing on the recent events in the broad markets such as the interest rate hike and the turbulence in the European markets. As the month of September has ended for trading, the historically volatile October is here.

As we did last weekend, we will be utilizing the newest TrendSpider feature, lower indicators. For a full introduction and explanation of lower indicators, please check out the following links:

Ticker #1: $SPY

Short-term technical setup: daily candle

$SPY daily chart.

The daily technical setup is showing oversold conditions on the Williams %R but more room to move down on the RSI. Based on this setup, it looks as if the $SPY may move up to test new “All-Time Highs”.
Price is holding right at the support trendline which is coinciding with the SMA (20). This area needs to hold to stay bullish short term.

Long-term technical setup: weekly candle

$SPY weekly chart.

The weekly candle is showing a very different story than the daily candle. Negative divergence is forming on all three lower indicators with the MACD starting to curl to the downside.
The thing to keep in mind with divergence is that it can always false signal. This is why it is also important to look at the daily candle which shows a rather bullish setup in the short term.

Ticker #2: $QQQ

Short-term technical setup: daily candle

$QQQ daily chart.

The daily chart of $QQQ is showing a recent bullish MACD cross which would suggest a reversal of the recent downtrend but negative divergence is also starting to show up.
If this started to break down, the next areas to watch would be the SMA (20) and EMA (50) below.

Long-term technical setup: weekly candle

$QQQ weekly chart.

The weekly chart is showing a strong candle with buyers in control all week.
The support and resistance areas to watch here would be the price channel resistance above shown by the yellow resistance trendline or the SMA (20) below (purple line).

Ticker #3: $XBI

Short-term technical setup: daily candle

$XBI daily chart.

The daily candle is still trading in an ascending wedge setup with the price getting very close to breaking down through this area.
The SMA is curling looking ready to possibly break through the EMA (50) below. Both the RSI and Williams %R still have room to move down.

Long-term technical setup: weekly candle

$XBI weekly chart.

The weekly candle is also showing a larger ascending wedge in play with the price closing right below the moving average resistance.
Both the Williams % R and RSI both showed an uptick last week with plenty of room to move in either direction. With systemic risk out of Europe still in play and interest rate dust settling, anything can happen in these markets in the next few weeks.