Don't Panic: Markets Are About To Drop AGAIN!?
In a Nutshell
Markets are oversold and supported by a consumer confidence beat, Neocloud rebound, and falling oil, making buying the dip more attractive than shorting ahead of Fed week. The speaker’s preferred strategy is to stay in cash during the FOMC decision, PC report, GDP, and big-tech earnings to avoid violent post-announcement reversals. Short-term upside hinges on a dovish Fed tone and 10-year yield staying near 5 %, with $700 QQQ support as the key line to hold.
These notes were generated by AI and may contain inaccuracies.
NASDAQ is currently up 1.35% for QQQ. The main drivers lifting markets today include chips and AI stocks, plus a consumer confidence beat at 91.7 versus 81 expected. Oracle's Nvidia expansion and the Neocloud rebound are contributing factors. Oil is down about 2%.
On the 4-hour timeframe, there is decent upside potential compared to the common support range of 700 for QQQ. However, the week contains significant economic reports including the FOMC rate decision, PC report, GDP report, and big tech earnings. The 10-year Treasury is sitting at 5%. A hot inflation print or hawkish Fed on Wednesday at 11:00 a.m. Phoenix time could change market direction quickly.
The preferred approach during Fed weeks is to stay in cash to avoid being caught in an oversold or overbought reversal. The reversal typically appears in the first hour after the Fed decision, providing opportunities on both sides of the trade.
New home sales came in at 676K versus the expected 651K for September, which was better than anticipated.
Consumer confidence came in at 91.7 versus the expected 81.2, representing a significant positive surprise.
The FOMC rate decision is scheduled for 2:00 p.m. Eastern time tomorrow, with the press conference following 30 minutes later. Big tech earnings tomorrow include Microsoft and Alphabet. Thursday earnings include Intel, Amazon, and SanDisk.
SK Hynix, a major memory chip manufacturer from South Korea, has been a significant catalyst. The KOSPI index opening at 5:00 p.m. Arizona time yesterday pushed markets higher.
Several Neocloud companies are showing significant gains: CoreWeave up 7%, NBIS up 11%, Irene up 7.55%, Oaklope up 5.2%, and Oracle up 4.6%. These stocks are technically oversold on larger timeframes despite appearing overbought intraday.
While these stocks may appear overbought on the day with potential for gap down, they are technically oversold on larger timeframes. The downside potential exists but the recovery potential is significant. The stocks are down 50% from recent highs, making shorting risky despite their speculative nature.
The probability tool indicates the Federal Reserve will most likely pause rates tomorrow. The focus will be on the tone regarding upcoming meetings. The 10-year Treasury yield around 5% will be key - rising yields indicate inflation concerns while dropping yields suggest cooling inflation concerns.
Oil prices are trading lower today. Lower oil prices reduce inflation concerns since oil is a major catalyst for rising inflation rates.
Markets are pushing higher due to: Neocloud companies rebounding, Oracle and Nvidia partnership catalyst, oil prices dropping, 10-year yield around 5%, and markets being in an oversold range with $700 support for QQQ.
Markets are oversold enough that buying the dip and going long makes more sense than shorting, even at current levels. Markets are more bullish than bearish. Position sizing should be limited to amounts that can tolerate volatility. Avoid getting shaken out of fundamentally good positions due to week-ahead volatility from earnings and economic reports.
Webull offers commission-free trading. New users signing up through the first link in the description with a $100 initial deposit receive 12 free shares and entry into a $1,000 giveaway. A random user who signs up for Webull will be selected during today's live stream for Robinhood and SK Hynix earnings.
LPP live trading sessions occur every morning at market open for 30 minutes to an hour. The LPP Lawson Library offers one-time payment lifetime access with an October sale bringing the cost to $1.30 per day.
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