US Markets “Roll Over” On Earnings And Economic Data At Channel Highs

As we near the end of October 2019, a very interesting price setup is taking place across many of the US market sectors recently. We only have a total of about seven trading days left in October 2019 and the Financial Sector ETF is rolling over with what appears to be an Engulfing Bearish price pattern near price channel highs. Additionally, the tech-heavy Nasdaq (NQ) has been mostly weaker compared to the ES and YM. 

On September 30, 2019, we published this research post that highlighted why our predictive modeling systems suggested the S&P 500 and Nasdaq market sectors would become much more volatile than the Dow Jones Industrials: MODELING SUGGESTS BROAD MARKET ROTATION IN THE NQ & ES

We believe this research is still very valid given the current price rotation near these price channel highs and given the potential that the Dow Jones stocks may become relatively stronger alternatives than the S&P 500 and Nasdaq sector stocks.

We believe a downside price rotation is setting up in the US and global stock markets and we believe the potential for large price moves exists in at-risk sectors like the Financials, Technology, Biotech, Energy, Services and other sectors that do not directly relate to what we feel are “essential consumer staples”.The Dow Jones Industrials Index is full of companies that traditionally perform better in a consumer-based economic contraction for investors – which is why we believe the YM will present a very unique opportunity going forward for skilled traders.

FAS DAILY CHART, THE DIREXION FINANCIAL BULL ETF

This first FAS Daily Chart, the Direxion Financial BULL ETF highlights the price channel in YELLOW and highlights the recent price rotation near the $80 price level which constitutes a potential “new lower high” price rotation. Our longer-term cycle analysis tools predict a downside price move initiating over the next 7 to 10 trading days. We believe this new downside price trend could push price levels below the lower price channel level if this move is associated with external news or economic data that panics the markets.

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