It will easily be the most challenging week of October, with a PPI report on Wednesday morning, the FOMC minutes on Wednesday afternoon, and the CPI report on Thursday morning.

On top of that, there will be a 3-year Treasury auction on Tuesday afternoon, a 10-year auction on Wednesday afternoon, and a 30-year action on Thursday afternoon. That will be a lot of data and potential areas where yields could move on either economic data or demand for newly issued bonds.

On top of all of that, following the strong job report on Friday, it seems possible that worries will be high heading into that CPI print, which could prompt plenty of put buying this week as investors try to hedge themselves. Estimates for CPI are 8.1%, down from 8.3% last month. Right now, the Cleveland Fed is forecasting a CPI of 8.2%.

Meanwhile, core CPI is estimated to rise to 6.5% from 6.3%. The Cleveland Fed is looking for the core to rise to 6.6%. Given how reliable the Cleveland Fed’s forecasts have been over the past year, you could see why the market might be nervous heading into those reports. Headline CPI has beaten the Cleveland Fed’s forecast 10 out of the last 11 times and 15 out of the previous 18 times. So that may suggest that the consensus forecasts are too low.

Given the hotter-than-expected unemployment rate, the risks are high this week. Especially when the Fed minutes will likely reveal that the Fed is willing to tolerate a rising unemployment rate and sacrifice growth to achieve its objective of getting inflation back to its 2% target.

Oil

On top of that, OPEC decided to cut its oil production, which suggests the price of WTI oil could head back to $109 following a falling wedge breakout on Oct. 4. Additionally, the downtrend in the RSI has broken out to the upside, suggesting a long-term bullish reversal of the trend.

Gasoline

Gasoline may not help either, as its RSI breaks out, signaling a bullish reversal. As well, the price is very close to breaking above significant resistance at $2.73, which could send it back to around $3.10.

S&P 500 (SPY)

And now that the S&P 500 rallied so much to start last week, the RSI is only at 37.7 with a lower Bollinger Band at 3,522. It needs to fall below 30 on the RSI and that lower Bollinger band to hit oversold levels, at least to start the week.

I do not think a drop to 3,517 would be challenging this week, especially after the index formed a diamond island reversal last week, combining an island reversal pattern and the diamond pattern I like to use.

Occidental (OXY)

If oil runs higher, as the chart above suggests, then Occidental Petroleum could be one stock that benefits and heads higher toward the upper end of its trading channel to $77.50.

Exxon (XOM)

Exxon could benefit this week as its RSI nears a breakout. Additionally, it has the potential for the shares to run higher to the uptrend at around $105 to $107.

Meta (META)

Meta broke down on Friday and fell out of a consolidation zone. How far down Meta can go from here can be left to one’s imagination. Yes, it may drop to that 1.618% zone on the chart below, but at the same time it could stop at any of those other Fib levels along the way, too. In the meantime, the low $120 seems ideal for the shares to gravitate towards.

Tesla (TSLA)

Tesla finally fell to support at $220, and the chart still looks pretty weak, with the following significant level to watch for at $209 and $180.

Shopify (SHOP)

Shopify is still holding the trend line, and the RSI is still bullish. So I still think that SHOP is going to turn higher. Maybe I’m kidding myself since I own the thing, but generally speaking, a rising RSI and falling stock price is a positive divergence, and if the stock can clear $30.50, there is a chance it could make a pretty big run higher. Of course, if that trend line around $27 breaks, that would be a disaster and lead to much lower prices.

More By This Author: