Stock Market Update & Weekly Trend Outlook – Week 42

THE BIG PICTURE

The major stock market indexes are in still moving higher and in strong uptrends. Although we are overdue for a pullback, the best thing for traders to do is follow the price action and avoid getting caught up in the noise and anticipating the next move. If/When we enter a market pullback, your process should stop you out of the trade… or offer new looks on both the long & short side.

Without further adieu, here’s my weekly futures trading update and outlook. We’ll start by taking a look at the S&P 500 (INDEXSP:.INX).

S&P 500 ETF (SPY) Chart – Week 42 (week of October 16)

Technical Trends…

• Check out our week 41 recap and trend charts
• Stock market indices momentum continues as the Nasdaq (INDEXNASDAQ:.IXIC), Dow Jones Industrials (INDEXDJX:.DJI), and S&P 500 (ES) closed above their weekly open and near all time highs.
• Dow Industrials futures (YM) continues to lead the drive to the upside as the Russell 2000 (INDEXRUSSELL:RUT) pulls back and the ES consolidates
• VIX Volatility Index (INDEXCBOE:VIX) is holding levels in the mid 9’s.
• FANG/FAAMG stocks holding just off 52 week highs and in MML resistance high zones.
  • Upcoming earnings data.
• VTI/FFTY momentum remains upside.
• Current IBD Outlook: Confirmed Uptrend (chart below)

Key Events in the Market This Week

• USA: Yellen, Beige book, Industrial Production, Housing data
• GLOBAL: China CPI
• Q4 Earnings Season
  • Netflix, Ebay, Paypal, AXP, JNJ
• Chip sector leaders

THE BOTTOM LINE

Technical Momentum probability on the indices remains in an UPTREND at MML highs.

Watch for MML setups on price action break above resistance high and back under resistance low for first signs of a pullback. Downside, watch for open gaps to be closed and 50% pullback as 1st level of support.

October permabears REMAIN and hoping for a pullback as Earnings Season now in full session with market cap leaders reporting. Continue to monitor FANG/FAAMG/FAAANG stocks pullback to play out the Nasdaq futures and Tech ETF momentum. Dollar index pullback losing some ground on the pullback upside in a downtrend momentum.

STOCK INDICES: LOWEST OPEN GAPS

• ES: 1589
• NQ: 3864.75
• RTY: 1462.1
• YM: 14745

Attempting to determine which way a market will go on any given day is merely a guess in which some will get it right and some will get it wrong. Being prepared in either direction intraday for the strongest probable trend is by plotting your longer term charts and utilizing an indicator of choice on the lower time frame to identify the setup and remaining in the trade that much longer. Any chart posted here is merely a snapshot of current technical momentum and not indicative of where price may lead forward.

Thanks for reading and remember to always use a stop at/around key technical trend levels.

Twitter:  @TradingFibz

The author trades futures intraday and may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.