Theshut down was not enough to derail the first trading day of the month phenomenon. There has been a bullish bias on the first trading day of the month for years now. Managers accumulate funds during the month and then deploy them at the beginning of the next month. With broad gains, the Russell 2000 ETF (IWM) and the Nasdaq 100 ETF (QQQ) surged to new highs. The S&P 500 ETF (SPY), however, fell short of a breakout and remains in a downtrend. New highs in IWM and QQQ are bullish overall. Moreover, chartists can now use the late September lows to mark key support. Gridlock continues in congress and the markets will still be vulnerable to the news coming out of Washington. A deal would likely send stocks sharply higher, while continued delay could keep buyers on the sidelines and an extended delay could trigger selling pressure.
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**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
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Key Reports and Events (all times Eastern):
*No Government Data During Shutdown
Wed - Oct 02 - 07:00 - MBA Mortgage Index
Wed - Oct 02 - 08:15 - ADP Employment Change
Wed - Oct 02 - 10:30 – Crude Oil Inventories
Thu - Oct 03 - 07:30 - Challenger Job Cuts
Thu - Oct 03 - 08:30 - Initial Jobless Claims
Thu - Oct 03 - 10:00 - Factory Orders
Thu - Oct 03 - 10:00 - ISM Services Index
Thu - Oct 03 - 10:30 - Natural Gas Inventories
Fri - Oct 04 - 08:30 – Employment Report
Tue - Oct 08 - 08:30 – Alcoa (AA) kicks off earnings season
Thu - Oct 17 - 23:59 - Debt Ceiling Deadline
Thu - Oct 24 - 09:00 - Government Runs out of Money (estimate)
Charts of Interest: Tuesday and Thursday
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
to have a plan. Plan the trade and trade the plan. Among other things, this includes setting
a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
