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October 18th, 2022
The Traders Reserve Curse Is Broken!
For the first time ever (maybe), the market jumped higher during a live Traders Reserve event. The streak is broken! Negative trends do eventually reverse! Let’s see what happens today. Can we get two positive trading days during a live event?
Stocks jumped on lower bond yields and positive earnings from the banks. Remember when we had a bunch of companies come weeks ago and lower their earnings expectations? Now those companies are beating expectations. Funny how that works.
I want you to spend your time listening to the presentations at the Millionaire’s Trading Event so I’ll keep this one brief. And if you’re not virtually attending MTC, I have to ask, why not? There’s a great lineup of speakers. Recordings will be made available for those interested.
I don’t have a trade idea for you today because I want to make sure you have the capital to take the trades that interest you during the MTC event.
Let’s look at some charts and where the market may go from here.
Here’s a chart of the SPY, showing that things may not be what they seem after an up day. Here’s the bearish case for the market ahead. The SPY (S&P 500) hasn’t crossed above its 20-day moving average, despite trading much higher on Thursday and yesterday. If you look back further, the 20-day moving average has consistently been acting as resistance since the end of August. The macroeconomics haven’t changed and there’s no reason to think we won’t hit resistance again and turn back lower from here.
That said, there are some technical indicators showing this may be the time we will get that break. The Relative Strength Index (RSI) indicator is showing bullish momentum against the downward price action, creating a bullish divergence. The MACD indicator is also oversold and has a positive cross. If the stock price action and the MACD can cross over their respective swing highs (let’s call it $380 on the SPY), we could see the market rip higher.
Enough of the S&P 500. Let’s look at the DOW.
The DOW 30 managed to stay above its 20-day moving average, but even after a gap-up that we had yesterday, we were not able to get a new high. I am looking for a positive day that can make a new 5-day high before we can say there was a followthrough from last Thursday. We’re now sitting at resistance at $305 on the DIA ETF.
Okay, back to MTC….
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