Increased Chance of Volatility

This week we saw the market continue to be affected by the news surrounding the US-China trade agreement. While this has been going on for some time, the market is still uncertain to what the outcome will be. Because of this, any news about an agreement or not, is causing the markets to swing up and down. As of this week, it looks like they may be coming to an agreement, so the market responded positively and moving higher.

We are also in the middle of the current earnings season which is causing some additional volatility in price fluctuations. While this is a quarterly event, it is still important to remember that missed earnings or better than expected earnings can cause both the individual stocks and the market can become less deliberate.

This upcoming week is a major news week as we are going to have the FOMC statement, interest rates and press conference on Wednesday. Then on Friday we will have the monthly Nonfarm employment numbers coming out. Both reports can cause the markets to really move when they come out but when they come out together, there is even a bigger chance for a very volatile week.

This week we are going to look at the daily chart of all 3 major indexes to see how they compare.

DJ-30:

Currently on the DJ-30 we are seeing an area of consolidation. This was particularly seen this week. One of the formations at we are looking at is the triangle pattern where we are seeing the highs get lower while the lows are getting higher. This formation may be leading to a breakout from this consolidation. We will be looking for the top or bottom part of the formation to be broken. When we see this, we will expect to see a strong move in the direction of the breakout.

NASDAQ

On the chart of the NASDAQ, we are seeing a strong bullish move where price is beginning to break above the level resistance. Today’s breakout may be the beginning of an extended run higher and one where we may see the other indexes follow.

S&P 500

On the daily chart of the S&P 500 you can see an example of how the market continues to cycle both up and down. This week we saw the bull push prices even higher. As we approach and exceed new high levels, look for the price to settle a bit before getting too anxious about entering additional trades. While new highs are great to see, we also need to recognize that prices are likely ready to pull back, even if only for a short time.

As we come to the end of October this next week, remember to continue using good risk management in all your trades. This will keep you protected against general volatile conditions and any that might be associated with earnings season. Also, remember to be patient in all your trade entries so you don’t force yourself to trade just so you can say you are a trader.