Today the market gave us a wild roller-coaster to ride on. We started the day with some news and headlines that push the market down before lunchtime even had the chance to come around.
Near the start of the day, losses came close to about 2% until we hit a support and held our place with a rally up. By the end of the day we closed off with +0.47% gains on the DOW and +1.16% for the NASDAQ. Let’s take a look at what to expect as we enter into the month of October.
Before the market opened, we saw Unemployment claims up from previous numbers. With Unemployment claims, we want to keep numbers low as it shows that less individuals are claiming for unemployment benefits.
The lower the number the better as this means that less government funds are being allocated towards paying for unemployment benefits. With this last report, the number came in at 219,000 individuals as compared to the estimated 215,000. Financial analyst looks at this poorly as it shows a weakening job market.
We see the market open at 09:30 A.M. and shortly after at 10:00 A.M. Institute for Supply Management release Non-Manufacturing Purchasing Managers’ Index (PMI). This is one of the leading indicators of overall economic health. Companies react quickly to market conditions and these deals with all the companies that deal with non-manufacturing businesses.
To support strong expansion the number should be higher than 50.0. Last report came in sitting at 56.4 and this report was forecasted to be just around 55.1. When the results came out at a low 52.6 this was a red flag signaling that business are purchasing less goods and supplies for the next quarter ahead.
This is not usually the case, as the last quarter tends to be normally higher as the holiday season promotes spending. The weak report quickly brought shock to the market where we noticed a quick sell off in U.S. Stocks.
October has had a history of bring fear into the market. Psychologically speaking many investors tend to be a bit more defensive in October. Aside from it being, a month packed with company earnings from various industries there has been a history of major events that occur in October. Many new investors may not be aware of the past events.
fear from the past
Back in 1929, the U.S. stock market experienced a major crash during the month of October. In 1987, U.S. stocks fell below the support level and dropped below a major zone. In 1997, the DOW fell over 500 points. Overall, the outcome of October can greatly vary on the overall direction of the market. Currently speaking investors are stuck between major economic pressures.
We have unsettles trade conflict with China and the US. We have expectation from the Feds to lower rates again this month as analyst are not anticipating that there is a 75% chance of there being additional rate cuts. President Trump has just issued new tariffs on the European Union specifically on Airbus as they are projecting to sell thousands of new aircraft to US carriers.
With so many factors at play, I believe we can expect to see more sideways trading markets. Investors do not like to gamble on feelings and rumors. Investors are looking for firm numbers and statements to support price action prior to making a bias. Word on the street is that we are entering recessionary conditions although I would not go as far to say that we are in a bearish market overall.
For the next few days, I am personally bullish. I would like to see the DOW make another move up in anticipation of strong earnings and rate cuts. All we need is trump to make one optimistic tweet and we can see the DOW climb back up towards its previous resistance. If we see rates drop down again this would help support price to climb up a bit.
If price starts to climb up keep a close eye to look for any stagnation. With volatility sitting relatively, high a bullish spike could just be the final candle to signal exhaustion in the market before moving down to new lows.
This post is very opinionate meant to be very opinionated. I actively trade the market on a daily basis and use this platform to share my ideas and thoughts on the current market conditions. I primarily trade Aviation stocks, as my overall bias on the aviation industry is extremely bullish.
This month I will be attending the National Business Aviation Association conference in Las Vegas and am looking forward to meeting other like-minded individuals who are working on new technology and services in the aviation industry.
If you are also going to be attending, the NBAA event in Vegas let me know, as I would love to be able to meet in person!
As always, make sure to stay informed on the latest in the industry, Happy Trading!