Stock Market Analysis – Thursday 11th October 2018

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831 points down on 10/10/2018 in the DOW JONES index what a bearish day but basically September – November months are volatile times of the year.

From my previous update on Monday the idea for a bearish move was floated that the candlestick pattern last week especially with the long upper shadow and the evening star reversal afterward. We had buying pressure but it all gave out there was no buying pressure yesterday after the market closed.

Futures are also down 269 points and with this indication if the opens on Thursday it is likely to open at 25250.

Where Does the DOW Go From Here?

Let go back to February 2018 stock market analysis for DOW JONES, look at the big candlestick, the gap down followed by a huge candlestick next day and a huge bullish candle afterwards. This may be the model in play this very time but I cannot confirm it just a trader’s hunch. See the rally in January 2018 to all time high of 26500, the freaking gap down and a big bearish 500 point trading session, followed by a gap down opening at 25347 just like we are seeing now to close at 24345 almost a 1000points on 5th February 2018. Following this 5th February session was a bullish candle, a Doji and a bearish candle and then the buying demand kicks in when you see the lower shadow.

My hunch is that Thursday is going to be bearish but there are alternatives.

Idea here is there will be a gap down with a bearish trade down to support levels 24,800. There are 3 primary pivot areas at 24,800, 24,500 and 24,000. It is scary but looking at February 2018 this could be the model of fizzles and rallies. Note that since July 2018 we have had a 2500 points move in the DOW JONES suggesting it is overbought.

Few months into the future we will look back and see the strong support at 24,000 and resistance at 26500. At this point in time I cannot with specificity state any fundamental reason for this move, I think the market is overbought and traders are taking profit so as not to get caught like the February 2018 move.

My hunch is the general sentiment is bearish and this may continue today but you may see an engulfing candlestick bullish because of the market volatility. It is scary but in hindsight it won’t be.

However, if we however a bullish Thursday then Friday will be a continuation to the downside as the bearish move is not completed.

What are the Indicators Telling Us

  • The oscillators depict a downside potential.
  • Stochastic is downside with 47.57 and 62.95 we need to get to around 20.
  • RSI is oversold and MACD is currently crossing down.
  • The Bollinger band is a bearish breakdown

 

NASDAQ 100 Index

315 points sell off; this was the scariest of all despite the strength of the technology sector. When it happens as this fast you need to pull the plug on your trades and ride the wave.it will be better to hedge with put options as you can recover your loses.
Targets on Nasdaq looks like 7300 as you have the Moving Averages crossing in a sort of trend reversal which is possibly a short term reversal to a 7300, 7000 and ultimately 6800 getting back to February lows

Indicators Tell The Story – NASDAQ 100

Oscillators are advanced
to 26.35 and 44.87 when the get to 20 RSI and MACH D oversold and Bollinger band
is bearish. Bearish trade with a probably 2 weeks we will be presented with
buying opportunities.

Conclusion

When the market is
fully confirmed bearish then we can take some bear trend market position. At this moment I recommend you tighten your stops if you are in any trade as most positions set up for bearish moves are triggered when the volatility in the
market is high.

 

 

 

 

3 Replies to “Stock Market Analysis – Thursday 11th October 2018”

  1. how come I did not see this analysis until today? this is quite detailed and analytic.

    I will bookmark your website for future reference.

  2. Well, I’m not a stocks guy, I just happen to not bet on this kind of stuff, but I do agree with Craig above there. Very thorough indeed. Useful for the stock folks!

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