Market analysis- 09Oct2022

Okie, let’s look at the market. As I am very busy recently, my post is a lot slower. But, I am still monitoring the market closely. Today, the posts will be long, and the contents are as below:

ii) Oil price

iii) My trade based on stage analysis

i) To be honest, after the last month CPI showed that the inflation is still not under controlled, the big sell off volume has made me stay away from the market for few days. As I know the sell off will be continue for a few days and there is no point to look at it. Only when the price hits 360, the critical support, then I take a look on the market again.

Yesterday, the job data also caused the market to sell off again. The job market is still solid, seems the recession is not there yet, but why sell off? It is because the economic data is lagging indicators. The current job data is solid, mean FED still has reason to further increase the rate, more liquidity will be withdrawn. But seriously I do not really care about this, everything is in the cycle, when the market is pricing in the recession, mean the bottom is soon or later. We just need to follow the plan, never panic, and add the shares accordingly.

What I care the most is, can I identify the leader when the market turns to bullish again? This is what I have been working thus far.

Look on the SPY chart, the 2 key levels to look at is 360 and 390. If it breaks below 360, we can anticipate the speed of selling increasing. 390 is the key resistance to break above the previous swing high. I would say that the next week CPI data is crucial. Before that, I won’t touch my long term portfolio, will just monitor and wait.

ii) Crude oil price

For crude oil chart, let’s look on the weekly candle. OPEC starts to control the production again, and this made the price higher this week. But from the chart, especially the volume, it is not significant. I anticipate the oil price will be still going lower, and break below the swing low of $75.

However, note that if the oil price is still staying at high but the FED is still keep increasing rate, this is not a good news at all. If stagflation happens, we will need to be even more patient for coming years.

iii) My recent trade.

I have to make a disclaimer that this is not a stock tip. And note that this is a trading stock, not for investing. Mean, I have already put a stop loss and I am ready to run when it falls below.

In fact, there are some stocks which are turning into up-trend recently, and apparently they are a lot stronger than the index. I found that many pharmaceutical companies are in strength mode. Thus, probably they will be leading the market.

Not sure how high/low it will go. I will share more when I am stopped out (either losing trade or winning trade). At the meanwhile, longing stock is still more challenging as overall the sentiment is bearish.

Final thought:

Everything is in cycle. Nothing is forever. The current market is down or weak, but the longer period for a bear market, the stronger it will be back in bull cycle. Do not let the current market to affect our emotion etc. Take a break, enjoy the hobby, stay more time with family, read books to upgrade ourselves etc, are a lot more important.

Never give up, only the people who stay, will be able to enjoy the fruitful outcome in the next bull cycle.