Weekly Reading for 10/2 - 10/6
Change of season?
Quick look at last week:
Well, folks, let's take a quick peek at last week, shall we?
I have to say, those bears didn't let me down one bit. I started the week with a hunch that things might lean on the bearish side, and boy, did they deliver, following the game plan step by step.
I had my eyes on a couple of caution zones: one being when the gap from June 9 got filled for #ES_F and #NQ_F. And what do you know? Right on the money! When #NQ_F hit 14595 (14586 actual low) on Wednesday afternoon, the market did a little jumparoo. Not a coincidence, if you ask me. Meanwhile, #ES_F dipped just a smidge below my 4290 mark, hitting 4277.
Now, let's talk #YM_F. Those bearish targets I mentioned? Nailed it. Actually, the bears went even lower than my last target of 33635, hitting a low of 33544.
#RTY_F was a bit trickier, I admit. My cautious bearish vibes were on point, especially with that green Monday close and the overall green close for the week. But, I'll be honest, the levels didn't play out as smoothly as in other futures.
And then there's our friend #DXY / $USD, doing its bullish dance for the 11th week in a row. On Wednesday, I threw up a post saying, "Hey, maybe it's time for a breather?" Lo and behold, it pulled back sharply on Thursday and Friday. But, hey, those bullish bulls aren't ready to throw in the towel just yet.
All in all, how were my market predictions and level readings from last week? They pretty much went according to plan, if you ask me. Go ahead and give my previous week's newsletter another read if you need convincing – I think you'll find it hard to disagree! 😉
While I initially identify flag levels at the beginning of the week, it's essential to understand that these levels may shift as the market exhibits its price action. Typically, if the market maintains a downward trajectory, green flag levels could adjust lower. Conversely, as the market continues its upward movement, red flag levels may move higher.
Week Ahead (10/02 – 10/06)
Events Calendar for next week:
#ES_F / $SPX Futures: Spotting Bullish & Bearish Flags
📈 Weekly: Conditionally Bearish 🐻 📊 Daily: Conditionally Bullish 🐂
Analysis:
The monthly close ended on a bearish note, and the week closed in the red. However, Friday's close above 4325 suggests that bears may be hesitant or waiting.
Last week, two critical support levels were held: the gap fill from September 9 and the trend line from October 22.
These supports held on Wednesday and were followed through on Thursday.
Friday's downward action hasn't completely negated that bullish move, so as long as 4305 holds, a retest of 4385 is likely.
A daily close above 4385 is crucial for the bulls, with potential resistance at 4380/4385 and 4400.
Once these levels are claimed, bulls may target 4500/4525.
Bulls could consider entry around 4315 with a stop loss at 4305 and a target of 4380/4385, with the first take-profit level at 4365.
Bearish sentiment could prevail if 4305 fails or if a bearish setup forms after hitting 4345, 4365, or 4380.
Keep in mind the October seasonality, which suggests a potentially bearish first week.
Note that Federal Reserve Chair Jerome Powell is scheduled to speak on Monday, which could influence market sentiment.
Monthly Viewpoint:
🐻 Bearish Goal: 4190/4180
🐂 Bullish Goal: Will revisit upon daily trend change hint.
Weekly Perspective:
🐂 Bullish: Hold 4305 up and we’re glancing at 4385/4400.
🐻 Bearish: Fail 4305 and it's a slide to 4230/4220.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 4305 holds, eye 4365/4385.
4365? Turn attention to 4400.
If 4385's claimed, set sights on 4448.
🐻 Bearish Scenario:
A breach below 4305? Brace for 4285/4262.
4262 crumbles? 4230/4220 beckon.
If 4220 gives, 4175’s the next station.
Zoomed-out View:
Stay bearish until we close above 4385, preferably 4450. Otherwise, 4220/4175 stays on the radar.
Key Levels:
Resistance: 4365, 4385, 4400, 4448, 4500
Support: 4305, 4285, 4262, 4220, 4175
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 4385 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 4448 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 4500 on a green day, potentially voiding the short-term weekly downtrend bias.
#NQ_F / #NDX Futures: The Cautious Path Ahead
📈 Weekly: Cautious Bullish 🐂 📊 Daily: Cautious Bearish 🐻
Analysis:
The monthly close ended on a bearish note, but last week managed to close with a slight green tint.
Notably, last week precisely held the 14595 support (14586 low) and maintained key weekly supports at 14730 and 14835.
This hints at a cautious bullish bias. However, the October seasonality could sway the tone, with 14730 support being a critical determinant.
Monthly Viewpoint:
🐻 Bearish Target: 14290
🐂 Bullish Target: To be determined if a daily trend change is observed.
Weekly Perspective:
🐂 Bullish: If 14775/14730 holds, targets are set at 15375/15465.
🐻 Bearish: If 14730 fails, a bearish sentiment may lead to 14290.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 14730 holds, 14950 is in play.
If 14950 is claimed, the target becomes 15150.
If 15150 is claimed, aim for 15375+.
🐻 Bearish Scenario:
If 14730 fails, 14570 is in play.
If 14570 fails, the next support is at 14460.
If 14460 fails, anticipate 14250, with an intermediate support at 14320.
Zoomed-out View:
Until a close > 15150, or at least 14950, maintain a bearish bias, targeting 14320/14290.
Key Levels:
Resistance: 15000, 15050, 15150, 15375, 15465
Support: 14835, 14695, 14570, 14460, 14370
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 14950 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 15150 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 15375 on a green day, potentially voiding the short-term weekly downtrend bias.
#YM_F / #DJI Futures: Still Bearish, but with caution
📈 Weekly: Cautious Bearish 🐻 📊 Daily: Cautious Bearish 🐻
Analysis:
The monthly and weekly charts flashed strong red candles on Friday, painting a bearish picture.
Maintaining a bearish bias, but exercising caution due to seasonality and key support levels on the horizon.
As long as bears hold the line at 33934/34115, the target remains 33280.
Bulls are weak below 34425
Monthly Viewpoint:
🐻 Bearish Target: 32910
🐂 Bullish Target: To be determined if a daily trend change materializes.
Weekly Perspective:
🐂 Bullish: If 33680 holds, the path to 34425 is open.
🐻 Bearish: If 33680 fails, look for 33280/33150.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 33680 holds, 33934/34115 comes into play.
If 34115 is claimed, target 34425.
If 34425 is breached, look to 34745 next.
🐻 Bearish Scenario:
If 33680 fails, anticipate a drop to 33448.
Should 33448 crumble, 33280 is the next support.
If 33280 doesn't hold, focus on 33150/32910.
Zoomed-out View:
Until a close > 34425, or at least 33680, maintain a bearish bias.
Key Levels:
Resistance: 33934, 34115*, 34295, 34360, 34425*
Support: 33680, 33610, 33542, 33448, 33280, 33150
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 34115 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 34425 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 34990 on a green day, potentially voiding the short-term weekly downtrend bias.
#RTY_F / #RUT Futures: Cautious opportunities for bulls and bears
📈 Weekly: Cautious Bullish 🐂 📊 Daily: Cautious Bearish 🐻
Analysis:
The monthly close was strongly bearish, pointing to further downside potential.
However, the weekly chart closed with a hint of green, fueling some bullish optimism.
Since Thursday's close was above 1810, it triggered a Lime Flag, shifting the weekly bias to cautious bullish.
To maintain the Lime Flag's effect, bulls must hold the line at 1790.
Monthly Viewpoint:
🐂 Bearish Target: 1752
🐻 Bullish Target: 1865/1905
Weekly Perspective:
🐂 Bullish: If 1790 holds, targets are set at 1864.
🐻 Bearish: If 1790 fails, the outlook turns to 1764/1752.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 1790 holds, the target is 1812.
If 1812 is claimed, aim for 1827.
Once 1827 is secured, the goal becomes 1864.
🐻 Bearish Scenario:
If 1790 fails, anticipate a drop to 1773.
Should 1773 falter, the next support is at 1764.
If 1764 is breached, the focus shifts to 1752.
Zoomed-out View:
Until there's a green day close above 1872, or at least 1864, maintain a bearish bias. However, this week presents the last chance for bulls to build a higher low by holding the support of the trend line from October.
Key Levels:
Resistance: 1805, 1812, 1827*, 1864, 1872
Support: 1790, 1785*, 1773, 1764, 1752
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 1810 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 1864 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 1872 on a green day, potentially voiding the short-term weekly downtrend bias.
#DXY / $USD : Bulls, ready to take breather?
📈 Weekly: Cautious Bullish 🐂 📊 Daily: Cautious Bearish 🐻
Analysis:
The US Dollar Index has been on a bullish streak for the 11th consecutive week.
There are early signs of a potential temporary top forming, but there's no confirmation as of yet.
On Wednesday, it was noted in real-time that a temporary top might be in the making. Thursday saw a significant move down, closing the day in the red. However, on Friday, bulls showed their determination not to give up.
For the bears to take control, they need to hold 106.68, potentially leading to a move down to the lower end of the channel.
Upside Targets:
If the bulls continue their march, upside targets above 106.835 are 107.075, 107.275, and 107.750.
In such a scenario, 107.275 could be the next level where bears may attempt to take charge.
Red Flags: Keep an eye out for potential signs of a bearish reversal on red days:
Orange Flag: Until there's a close above 105.515, consider the market to be under Orange flag advisory.
1st Red Flag: A close below 104.420 on a red day may suggest that the short-term weekly uptrend bias is in question.
2nd Red Flag: If the market closes below 104.025 on a red day, indicating potential voiding of the short-term weekly downtrend bias.
Note about Seasonality:
In the world of trading, there's always a lot of chatter about October and Q4 seasonality. But here's the thing: seasonality plays a role until it doesn't 🙂.
Take a look at the table below to see when it did and when it didn't in 2023 so far. We've also included a historical chart for October seasonality.
While it's valuable to be aware of seasonality, it's crucial to remember that what unfolds right before your eyes carries more weight than any seasonal patterns or other factors. I firmly believe that paying attention to the levels and flags I've identified above will provide better guidance than seasonality alone.
Stay vigilant and adapt your trading strategies based on the changing market conditions and the key support and resistance levels outlined above. Keep a close watch on the flag levels as early indicators of potential shifts in bias. If you aren’t already following me on X @trdnvestor , consider it for daily/intra day updates.
May the Market be on your side!
Disclaimer: This is NOT financial advice. I am NOT a financial advisor.