Market Not Scared On Halloween

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Alex Partida

Oct 31st 2022  .  6 min read

Halloween may not be the only thing spooking the market this week, with many catalysts approaching. On Wednesday at 2:00 pm Eastern, the Federal Open Market Committee (FOMC) will host a press conference. Thirty minutes later, Federal Reserve (Fed) Chairman Jerome Powell is set to speak shortly after at 2:30 pm. Initial jobless claims and nonfarm payroll (NFP) come later in the week. 

Pre-market action was already telling of profit-taking to end the month coming into the cash session. When the last day of the month comes around, it is not uncommon for choppiness as funds and institutions rotate their money around, especially after a rally like last week. 

The profit-taking continued when the opening bell sounded as the indexes drifted lower. After a rally into last week’s close, big money on Wall Street has to realize some of their gains, bringing the market down. 

One of the biggest things to watch for during profit-taking is the movement’s strength to the downside and whether it can remain strong enough to prevent a sell-off. 

Today the market was strong enough to sell while maintaining enough strength to prevent a market-wide panic. 

Overall, the S&P 500 futures were in a very tight range of 3,900 to 3,875. This range has a few critical levels that are considered psychological levels. 3,900 is a massive psych level that will play a part in the market’s next big move. The bottom of the range was what is known as a mini-psych level, as 3,875 held firm.

Moving forward, both of these levels can be used as a line in the sand as the market will remain range bound until one of them break. 3,900 is the higher psychological level and should have a heavier weight.

Throughout the day, the line in the sand of 3,900 was tested a couple of times, and each time the market was faced with a rejection that sent the market lower. If the market struggles to get through this crucial level, moving back toward the 50-day simple moving average (SMA) at 3,848 on the S&P 500 futures may be in the cards.

On the other hand, if the market can fight through the psychological level and hold 3,900, there might be enough gas in the tank to give 4,000 a test before the FOMC meeting on Wednesday. 

After all, today’s action leaves two viable options heading into FOMC. Today was either an indication of the buying pressure starting to slow and sellers stepping in before a big event or more capitulation mixed with profit-taking that will help accelerate the market beyond last week’s highs.

Either way, you view it, the lines in the sand will guide you in the right direction. If it is above 3,900, this market can try to break out of today’s range, and if below 3,875, there might be a more significant pullback in the cards. Anything between this range should result in a choppy environment for this market. 

The stock market begins the week red

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 closed down 0.78%, losing 30 points, while the Nasdaq closed down 1.07%, a loss of 118 points. The Dow followed, closing down 0.37%, declining 122

 points.

Market un-spooked on Halloween

Halloween may not be the only thing spooking the market this week, with many catalysts approaching. On Wednesday at 2:00 pm Eastern, the Federal Open Market Committee (FOMC) will host a press conference. Thirty minutes later, Federal Reserve (Fed) Chairman Jerome Powell is set to speak shortly after at 2:30 pm. Initial jobless claims and nonfarm payroll (NFP) come later in the week. 

Pre-market action was already telling of profit-taking to end the month coming into the cash session. When the last day of the month comes around, it is not uncommon for choppiness as funds and institutions rotate their money around, especially after a rally like last week. 

The profit-taking continued when the opening bell sounded as the indexes drifted lower. After a rally into last week’s close, big money on Wall Street has to realize some of their gains, bringing the market down. 

One of the biggest things to watch for during profit-taking is the movement’s strength to the downside and whether it can remain strong enough to prevent a sell-off. 

Today the market was strong enough to sell while maintaining enough strength to prevent a market-wide panic. 

Overall, the S&P 500 futures were in a very tight range of 3,900 to 3,875. This range has a few critical levels that are considered psychological levels. 3,900 is a massive psych level that will play a part in the market’s next big move. The bottom of the range was what is known as a mini-psych level, as 3,875 held firm.

Moving forward, both of these levels can be used as a line in the sand as the market will remain range bound until one of them break. 3,900 is the higher psychological level and should have a heavier weight.

Throughout the day, the line in the sand of 3,900 was tested a couple of times, and each time the market was faced with a rejection that sent the market lower. If the market struggles to get through this crucial level, moving back toward the 50-day simple moving average (SMA) at 3,848 on the S&P 500 futures may be in the cards.

On the other hand, if the market can fight through the psychological level and hold 3,900, there might be enough gas in the tank to give 4,000 a test before the FOMC meeting on Wednesday. 

After all, today’s action leaves two viable options heading into FOMC. Today was either an indication of the buying pressure starting to slow and sellers stepping in before a big event or more capitulation mixed with profit-taking that will help accelerate the market beyond last week’s highs.

Either way, you view it, the lines in the sand will guide you in the right direction. If it is above 3,900, this market can try to break out of today’s range, and if below 3,875, there might be a more significant pullback in the cards. Anything between this range should result in a choppy environment for this market. 

The stock market begins the week red

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 closed down 0.78%, losing 30 points, while the Nasdaq closed down 1.07%, a loss of 118 points. The Dow followed, closing down 0.37%, declining 122

 points.