S&P 500

U.S. Markets Look To Close Week Strong

Posted Friday, October 4, 2019 by
Shain Vernier • 2 min read

October has a reputation for being a volatile month in the markets and 2019 is living up to the hype. Equities, commodities, and the USD have exhibited wide daily ranges over the first four sessions of the month ― is this the beginning of a historic October on Wall Street?

It certainly appears so. Lagging economic metrics and the Trump impeachment saga have investor angst at or near five-year highs. This morning brought another collection of challenging U.S. economic reports. Here is a look at the highlights:

Event                                                Actual      Projected     Previous

Non-Farm Payrolls (Sept.)              136K             145K            168K

Unemployment Rate (Sept.)            3.5%             3.7%             3.7%

Trade Balance (August)                 $-54.9B       $-54.5B        $-54.0B

The only encouraging number here is the 3.5% aggregate unemployment rate. Non-Farm Payrolls disappointed expectations and the Trade Balance (August) grew. If one is looking for signs of cooling economic conditions, then there is more proof in this set of figures.

U.S. markets are making an about-face at the mixed data. On the opening bell, the DJIA DOW (+92), S&P 500 SPX (+9) and NASDAQ (+35) are trading to the green.

U.S. Stock Markets Rally On Open

The equities bulls are flexing on Wall Street with the DJIA gaining steam above 26250. At this point, a late-week buyback looks to be the order of the day for the U.S. equities markets.

December E-mini DOW Futures (YM), Daily Chart
December E-mini DOW Futures (YM), Daily Chart

Here are a few resistance levels to watch for the remainder of the session:

  • Resistance(1): 62% Weekly Range, 26529
  • Resistance(2): Bollinger MP, 26629

Bottom Line: The early rally in the December E-mini DOW has taken out the 38% Retracement of this week’s range (26214). Although the daily bearish trend is intact, it is being challenged. At this point, a test of the 62% Weekly Range retracement (26529) is likely.

For the remainder of the session, I will have sell orders in queue from 26519 in the December E-mini DOW. With an initial stop loss at 26556, this trade produces 35 ticks on a slightly sub-1:1 risk vs reward management plan.

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