Does market rebound have momentum?

2020-09-14

What’s the cure for a bad week in the stock market?

Start this week off with a strong uptick across the board.

The Dow snapped back to 27,993.33 points to gain 1.18% (adding 327.69 points on the day). The Nasdaq jumped 203.11 points for a 1.87% rebound while the S&P 500 joined the upswing by 1.27% to 3,383.54 points.

While the Monday rebound sent the market “green,” traders are watching the overall market chop and any consolidation to indicate long-term directional momentum.

A variety of factors are in play when determining direction this week as Covid-19 vaccine prospects are fluid, tech companies jostle over big purchases, and Friday is quadruple witching (expiration of stock options, stock index futures/options, and single stock futures).

Volatility is heavier as the market works out a continued rally or faces another flush.

Historically September doesn’t have a strong track record, which magnifies concerns heading into the end of the week and expiration near the end of the month. Simpler’s traders may consider longer time frames for setups with expectations the market tends to pick up into October and through the end of year.

Positives are that key sectors, such as home builders and technology, are delivering strong signals.

Volume to start the week supports market consolidation even with the volatility, which may prove helpful in influencing market direction.

Simpler’s traders are watching for indicators to signal a stronger uptick that will push through the chop.

Signs are the market is positioning for a bounce, but any unforeseen news could throw a wrench into the momentum.

The market is proving tricky into the witching expiration, so traders are targeting setups that may include put credit spreads and butterflies. The goal is to not get caught on the wrong side of any sudden shift in a market that has proven fickle with any sudden news.

As we always share, no matter what the market is doing be sure to follow your trading plan which should fit your style, interests, and risk management.

We Saw: market with an upside rebound — 

  • Mixed signals on Covid-19 vaccine
  • Big tech jostling over TikTok buyout
  • Few high-probability opportunities

We’re Watching: strength for market momentum —

  • Squeezes that signal market shift
  • Long-term play possibilities
  • Setups in: DKNG, SLV, WKHS, AMZN

Learn more about navigating volatile markets — check out the Simpler Trading community HERE.