Stocks Dip Then Rip As The Roller Coaster Continues
Michael Kramer | Oct 07, 2021 12:53AM ET
Stocks finished the day higher by 40 basis points, after starting the day sharply lower. So this is getting to be somewhat tiring, with the index just bouncing around. It is creating a giant consolidation pattern here in the US markets.
VIX goes up; the market goes down; VIX goes down; the market goes up. It tells us there is no confidence in this market, and the options market is firmly in control, just bouncing the S&P back and forth between support and resistance.
I don’t think much of this decline has to do with the debt limit. First off, I couldn’t imagine the debt ceiling not being lifted. Second, the dollar index has been rising. If people are worried about the debt limit, why is the dollar going up? Shouldn’t it be falling? Plus, bond yields have hardly even moved. So let’s forget about this debt limit thing; if the market rallied Wednesday because of the debt limit potentially being extended, then it is likely to sell right back off today. The recent decline has nothing to do with the debt limit, although it makes for great headlines.
Anyway, the pattern on Wednesday looked very much like the pattern on Oct. 1. So does it mean we get a repeat of the past couple of days and head lower again today? It certainly could. There is a gap that needs to be filled at 4,435.
Walmart (NYSE:WMT) has been holding on to support around $135, and while the stock has likely not yet bottomed, it probably is due for a short-term bounce higher back to $142.
Get The News You Want
Intel (NASDAQ:INTC) looked very weak, and the stock was likely to head lower in the future. Earnings growth for this company will be hard to come by over the next year, and that means even at 12 times forward earnings, the stock isn’t cheap. It probably could see a PE that falls to around ten over time. I would not be surprised to see it break the uptrend and fall to $47.
Adobe Systems (NASDAQ:ADBE) is another stock that is oversold currently, with an RSI below 30. Like Walmart, it probably hasn’t bottomed yet, but it is due to rebound and fill the gap back to $604.
I guess we will see what today brings again. At this point, it is anyone’s guess.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.