Stock Market: What We're Watching With $SPY

Short term, there's plenty to lean on this stock market. As you know I've been short term bearish but the downside risk/reward shorter term is not as good after this recent move. There can easily be a bounce but a shorter term bounce.

Medium term though the break of 289-290 in the $SPY is a risky medium term break. If it doesn't crawl back above it, to me it's more confirmation of downside.

You have a few things weighing on markets and one main thing supporting markets.

Weighing on markets is President Trump's tough talk on China ahead of their Oct 10th meeting, Impeachment talk, and last week's PCE Price which ticked up to 1.8% closer to the Fed's 2% target. That can mean fewer rate cuts which the market is not yet pricing in.

Supporting markets, and this is so key to watch are yields. Yields hanging in there and not jumping makes you not want to be aggressive short when markets trade off into near-term support. But at some point I think yields can break topside if global central banks continue to ease and inflation continues to tick up.

When is there risk for a bigger faster down stock market move? I think you need to see yields jumping or maybe the dollar breaking then it's easier to expect bigger faster moves.

I also think markets can trade off ahead of earnings season starting in two weeks concerned about trade war impacts to reported numbers. I'm bullish on earnings for Q3 reports and have my favorite names but I think stocks can trade off into that creating good buying opportunities.

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All trades are hypothetical to show rating and opinion. All trades exclude relevant transaction costs. We have no holdings in the stocks mentioned unless otherwise noted.

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