Weekly Plan 10/2
New Quarter New Mean?
Hello traders,
Hope you had a great weekend.
As September is behind us and our long term thesis of September being a down month played out perfectly in the second half of the month.
As for last week,
4363 acted as a great LIS for longs and netted us a bunch of points.
For NQ, it bounced exactly from our weekly level and is trading 450 points higher at the time of writing this post on 0 tick drawdown(this doesn’t happen always and it would be unrealistic to expect so)
Moving on,
The Political Soap Opera
Ah, the ceaseless dance of democracy played out last weekend, as Congress momentarily laid down their swords to prevent a government shutdown and keep the capitol hill humming till mid-November. This little detente ensures Uncle Sam can pay the bills and keep the lights on for another fleeting six weeks, dodging a market-whipping crisis. Yet, this isn't a finale, but merely an interlude. The saga of budget negotiations and the reconciliation package, starring President Biden’s grand social and climate choreography, is set to continue. The final act is poised for mid-November, with market spectators anxiously awaiting if this political drama will unveil a triumph or a tragedy.
The Historical Script
As we step into October, one might say the historical market script hints at a bullish narrative ahead, till the curtains draw on this year.
The Stock Trader’s Almanac shines a spotlight on October, revealing it as a scene of gains for $SPX, averaging a 1.1% rise since the 1950s.
Moreover, the final act of the year, Q4, tends to take a bow with an average applause of 4.2% gains. The recent five-year encore of bulls (2015-2020) has seen an exemplary performance, with an average gain of 9%. Whether it’s the seasonal plot twists, earnings disclosures, holiday spending spree, or the year-end portfolio fine-tuning, October through December has traditionally set the stage for a bullish $SPX narrative.
The unfolding weekly scene demands the 4322 hold its ground. Should ES hold above these critical plot point, it might signal a bullish strength, with the bears facing an exit stage right. A successful ascension above 4360.25 could herald a bullish momentum, putting the bears in the hot seat. Projecting a composite average gain script from the last quarter's historical playbook, we might be looking at a ES target of 4773.50 as the year's curtain call.
THE DON’T BE A DUMBFUCK WARNING:
Of course, history is not a playwright, and past market scripts don’t always get a re-run. The market theater is directed by a myriad of factors like news, global events, trader sentiments, and expectations. A savvy trader wouldn't just read historical scripts but would also dissect market internals, fundamental analyses, adopting a sound risk management strategy to navigate the market drama.
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Levels for this week: