Time To Run With Bulls As Market Gets Sloppy?

2020-10-19

A weird Monday led Simpler’s traders to wait and watch as the day unfolded into a sharp drop across the market.

Memories of days past (it’s the anniversary of Black Monday in 1987 when U.S. markets dropped more than 20% and markets around the world crumbled) flickered before settling into a 2020 “normal” down day.

The Dow closed at 28,195.42 points to fall 1.44% (dropping 410.89 points on the day). The Nasdaq dropped to 11,478.88 points for a 1.65% tumble while the S&P 500 lost 1.63% to 3,426.96 points.

Such a sloppy environment left traders asking, “What to do on a dour day?”

Simpler’s traders are taking a positive tack and looking to the upside as earnings season rolls around.

Next week and the following week are prime weeks for the typical, expected bullish run into earnings. Typical doesn’t appear poised for any broad blast off to the upside, but individual ticker symbols are showing promise.

Key names — likely in tech and other stronger sectors — could deliver more expected or “calmer” setups through earnings announcements.

No matter the outlook, expect some volatile whipsaws from market reactions to politically-based stimulus talks, election day fast approaching, and the aftermath of election day — either way it goes.

Let’s see if earnings season can hold for a run up one more quarter this year, and let the politicians dicker as they will.

We Saw: Market gap down across the board — 

  • Stimulus talks set off blame game, trader emotions
  • Airlines boosted by traveler numbers, report
  • Market uncertainty over Covid-19 spread, vaccine

We’re Watching: For positive plays in sloppy markets —

  • Which earnings kick in first and what tone that sets
  • Taking profits where can for anything on the books
  • Setups in: PENN, FROG, TTWO, CVNA, LVGO