Bearish Patterns Setting Up For October Bottom?


Simpler Trading Team

Oct 04th 2021  .  2 min read

Simpler traders are well aware that October has historically been a month of rough trading in the market.

Not the type to be easily spooked as we enter the fourth quarter, Simpler’s team is ready to change focus to find less conventional patterns while we wait and see whether this month is a horror show or a lead-in to a bullish end of year.

The first full week of the month didn’t start off well with all three major indexes closing heavily in the red. The Nasdaq and tech stocks were the hardest hit as the index lost more than 2 %.

When faced with a challenging month, Simpler’s traders are ready to bring out a whole new set of indicators to take on the market going low. While the market may appear primed for panic, we aren’t going to run away during October struggles. Our traders adjust and go in a different direction with trades if necessary.

We’re looking at possibilities to short the rip and will continue to do so until the market begins to rally. The goal is to follow technical signals that might give us the setup we need to adapt our watchlists and our trades to focus on stocks that show the way the market is moving.

The key is to focus and trust only what we can see that the market is giving.

Simpler’s team is following different sectors as well. Technicals and financials may not be revealing the visuals and patterns we might expect in a “normal” market environment. Traders will become increasingly more comfortable with patterns that signal more advantageous trades.

Simpler’s traders are still watching to see what the first month of the final quarter has in store before anticipated end-of-year rallies. There may be a repeat of steep selling. When selling leads to more selling, traders buying in margin accounts can anticipate margin calls. We possibly may see a steeper decline until the market rebounds.

While the market may be moving to the downside, expectations on the team are that the market isn’t ready to hit bottom.