The Reversal Around the Corner

While the bearish members of the market are securing an immeasurable amount of gains, the greed index on the bearish side is becoming awfully overwhelming. This, of course, comes with good reason. However, we must remember that greed in either direction is neither healthy nor sustainable. Here is what I believe we will see in the market within the next few weeks.

Important Dates

  • October 20 & 21, 2022

  • November 2, 2022

  • November 4, 2022

October 20 & 21, 2022

There are several reasons why these dates should be highlighted on your calendar. On the fundamental side of things, the report for initial jobless claims, continuing jobless claims, and home sales will be released on October 20th.

The forecast for jobless claims are expected to rise from 228,000 to 235,000. In my previous outlook, I mentioned that we must see an increase in jobless claims to indicate a potential reversal in the market. Depending on the outcome of real numbers, we will likely see some impact on the S&P - higher than expected would bring the marker upwards, whereas a lower number could cause another drop in the market.

Housing sales will also affect the market overall as we may see a drop in home sales as an indication of lower supply/demand - some good news for middle and upper-middle classes.

On the technical side of things, we have an area of high confluence hovering between end of day October 20th and the morning of October 21st. Consider this a catalyst to the fundamental details mentioned above. The direction caused by the fundamentals will be further reinforced by the technicals - causing a greater move in that direction, whatever it may be.

November 2, 2022

With the last Federal Reserve FOMC meeting, we saw an almost immediate market reaction. The next FOMC meeting will be held on November 1st and 2nd at 2PM EST. Though, my assumption is that the results of the next two FOMC meetings has already been priced in as Jerome Powell indirectly informed us on the interest hikes we will be experiencing by end of year. The only way the market will see mind-blowing movement is if the hikes are not as expected.

November 4, 2022

This is an important day for options traders - specifically contracts expiring on this day. By this point, we will see drastic amounts of hedging as the FOMC meeting will have passed and roughly 4/5ths of the S&P will have reported their earnings. To add, the mid-term elections will be held on the following Tuesday November 8th. This is a large sum of information to retain and will likely affect the market to an extent beyond expected.

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