Happy October!
Updated
I think I have been around for... 3 Octobers so far? Probably, and each time I always do a themed post! Since October is my favourite time of the year.
October also marks the beginning of the end. The end of a trading year at the end of this new quarter. And in the interest of going all out with different October themes and providing you with information into the year end, I suspect this will be a lengthy post, not simply talking about what to expect for October, but also talking about the bigger picture into the end of the year and trading year.
I guess we can break it down, we can break it down to the short term, next week, the month then the EOY.
The Short Term
The short term (i.e. next week) is, again, looking bullish. Expect some downside days, but just generally look for bullishness. Momentum is lacking. Ironically we are experiencing price action I call "Zombie Buying". Most call it "grinding" but its zombie buying.
What that means is, there is 0 momentum, low volume, but 0 reason to sell. So we have small buyers, like retail, buying because, well, there is nothing else to do, and so we get a slow and painful grind up. Its mindless buying, for no reason, so hence why I call it "zombie buying".
You can see volume, while steady, has been lackluster.
Its more than likely we will see bearishness at points next week. Outlook is more bearish on QQQ for Monday than SPY, so SPY may end up just grinding and trying to move higher, while QQQ sees a bit of a sell. But the motto remains to buy the dip.
The immediate target for next week is a move back to 569.29.
If we take a look at the last week's worth of Volume nodes:
Those are our top POCs/volume zones that you can look for from last week's trading, with the lowest being at 568.68, which would serve as an ideal pullback zone.
The best fit forecasted high for SPY next week is 577.60, assuming a bullish bias.
And for the low its 563.62 assuming a bearish bias.
The Larger Outlook, Month and EOY
So, as we are in a new quarter, we have some new high probability targets.
We still need to see 585 into EOY. 585 is actually the quarter point forecast, so that is great news!
However, with the new quarter, we now have a bit of a bearish high prob on SPX as well:
5,657 is the SPX target. We have yet to hit it, so if we don't pullback into next week enough to remove it, and we run up to the 585 first, it will make for a nice pullback play towards EOY.
If we run an ARIMA on SPX (Because I don't want to disrupt my SPY art already haha):
The point forecast for SPX, over the next 75 ish trading days into EOY, is 6,232. This is a price of around 621 on SPY.
Do I think it goes that high?
Probably not, especailly with the lack of momentum we are seeing come in. But it is possible. With the gains SPY has already made, its hard to see how much more they push it on a Santa Rally, but I think anticipation of the low 600s, to 600 is not impossible.
Its interesting as well because if we go back to my beggining of year post for SPY, these were the ARIMA results:
80% Confidence that the true high of SPY next year will fall BELOW 591.
95% Confidence that the true high of SPY next year will fall BELOW 633.
80% Confidence that the true low of SPY next year will fall ABOVE 433.
95% confidence that the true low of SPY next year will fall ABOVE 391.
So we knew as early as January that 600s were in the realm of possibility this year.
591 is something I do anticipate seeing at this point.
So what is the answer for the "longer term"?
I don't see any downturn starting before next year. And by downturn I mean bear market, correction, whatever you want to call it. I just don't see it happening until next year.
The immediate anticipation is the move to 585. From there, perhaps we grind up on the Santa rally to 591 and potentially 600 to snag closer to the 95% range.
This would be enough to cause a correction/pullback, if not just another 10% crash.
The outlook for next year will remain to be assessed closer to that point. As of now, these are the targets I would be watching. Downside targets remain inconsequential at this point, imo.
I guess that's it!
Safe trades everyone and Happy October!!
October also marks the beginning of the end. The end of a trading year at the end of this new quarter. And in the interest of going all out with different October themes and providing you with information into the year end, I suspect this will be a lengthy post, not simply talking about what to expect for October, but also talking about the bigger picture into the end of the year and trading year.
I guess we can break it down, we can break it down to the short term, next week, the month then the EOY.
The Short Term
The short term (i.e. next week) is, again, looking bullish. Expect some downside days, but just generally look for bullishness. Momentum is lacking. Ironically we are experiencing price action I call "Zombie Buying". Most call it "grinding" but its zombie buying.
What that means is, there is 0 momentum, low volume, but 0 reason to sell. So we have small buyers, like retail, buying because, well, there is nothing else to do, and so we get a slow and painful grind up. Its mindless buying, for no reason, so hence why I call it "zombie buying".
You can see volume, while steady, has been lackluster.
Its more than likely we will see bearishness at points next week. Outlook is more bearish on QQQ for Monday than SPY, so SPY may end up just grinding and trying to move higher, while QQQ sees a bit of a sell. But the motto remains to buy the dip.
The immediate target for next week is a move back to 569.29.
If we take a look at the last week's worth of Volume nodes:
Those are our top POCs/volume zones that you can look for from last week's trading, with the lowest being at 568.68, which would serve as an ideal pullback zone.
The best fit forecasted high for SPY next week is 577.60, assuming a bullish bias.
And for the low its 563.62 assuming a bearish bias.
The Larger Outlook, Month and EOY
So, as we are in a new quarter, we have some new high probability targets.
We still need to see 585 into EOY. 585 is actually the quarter point forecast, so that is great news!
However, with the new quarter, we now have a bit of a bearish high prob on SPX as well:
5,657 is the SPX target. We have yet to hit it, so if we don't pullback into next week enough to remove it, and we run up to the 585 first, it will make for a nice pullback play towards EOY.
If we run an ARIMA on SPX (Because I don't want to disrupt my SPY art already haha):
The point forecast for SPX, over the next 75 ish trading days into EOY, is 6,232. This is a price of around 621 on SPY.
Do I think it goes that high?
Probably not, especailly with the lack of momentum we are seeing come in. But it is possible. With the gains SPY has already made, its hard to see how much more they push it on a Santa Rally, but I think anticipation of the low 600s, to 600 is not impossible.
Its interesting as well because if we go back to my beggining of year post for SPY, these were the ARIMA results:
80% Confidence that the true high of SPY next year will fall BELOW 591.
95% Confidence that the true high of SPY next year will fall BELOW 633.
80% Confidence that the true low of SPY next year will fall ABOVE 433.
95% confidence that the true low of SPY next year will fall ABOVE 391.
So we knew as early as January that 600s were in the realm of possibility this year.
591 is something I do anticipate seeing at this point.
So what is the answer for the "longer term"?
I don't see any downturn starting before next year. And by downturn I mean bear market, correction, whatever you want to call it. I just don't see it happening until next year.
The immediate anticipation is the move to 585. From there, perhaps we grind up on the Santa rally to 591 and potentially 600 to snag closer to the 95% range.
This would be enough to cause a correction/pullback, if not just another 10% crash.
The outlook for next year will remain to be assessed closer to that point. As of now, these are the targets I would be watching. Downside targets remain inconsequential at this point, imo.
I guess that's it!
Safe trades everyone and Happy October!!
Note
And bull target reached, big shocker there am I right? haha
Rejected off it which is interesting.
Either way, remember selling is irrelevant and should be ignored. I believe the trading method is called RCI, red candle ignored? Golden strategy in this market xD.
Safe trades everyone, remember not advice!
Note
Hey there guys! I may just use this idea to update for the foreseeable future.
Here is where we are
We are seconds away from the high prob of 585. We will see that 585 high prob (derived from SPX model) is around the 3 month bullish condition, the condition in which we need to pass before we look for the 3 month high targets.
We still have an unhit bearish high prob which converts to around 563 on SPY.
Looking at updated forecasting models, the similar year analysis (identifying the most similar year and forecasting based on that year) is what I am relying on the most here, as we are approaching the end of the trading year.
That puts us at a high on the year of around 602 with a close in the 590s.
The most similar year is 2021. Pulling up the seasonality metrics here are the results:
October, pretty bullish for this forecasted period. November is probably the month to look for the pullback / slight correction, probably to the high prob (if not taken out sooner).
From there we will likely head back up into December, for the move to the 600s.
This is contingent on the forecast remaining steadfast with 2021 being the most similar year.
For next week, here are the point forecasts:
Point forecast high for SPY is 584. So we can likely see our 585 next week.
Point forecast for low is 569.32.
The retracement level is 575.
Look for 575 as your immediate target.
Probability is slightly bearish for next week, which generally translates to more of a consolidation week in the current climate, so be prepared. If we open well above 575, that would be a great target to go for though! Otherwise, probably avoid it.
I am long on it, have been long for a bit, waiting for 585. From there I will expect correction into November and will re-long into end of November into December most likely, barring any major changes to the forecasted outlook.
Safe trades everyone!
Note
And 585 hit!!
Note
And there are those bearish probs making an appearance!
Remember, the last high prob target outstanding is around 564 on SPY.
Safe trades!
Trade closed: target reached
We are about to snag 591 today :O, look for initial rejection here.
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