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Posted September 30, 2020

Scott Stewart

By Scott Stewart

The Market Coiling for a Big Move

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Hi, folks! Welcome to todays Rude Awakening.

Lets dig into whats going on in the markets

A Small But Crucial Cross

Looking at yesterdays market action, you can see a small cross of two very important lines on the S&P

IMG 1

That top line is of course the 50day MA.

If we stay below it, its a bearish indicator.

But if we can push above and stay above it for a few days, its a bullish indicator.

Were hovering right above it now.

But, whats even more important in that image above is the tiny candlestick all the way to the right, demonstrating yesterdays full market action at a glance.

Its called a doji. Its named from a Japanese word that means indecision.

What we can take away from this is, it looks like the market is coiling

Last Nights Debate Effect on the Market

The doji doesnt tell us which direction the market is about to shoot in, but it does tell us the market is poised for a move.

Looking at the overnight futures, the market did not like last nights presidential debate.

Focusing on the chart, as the debate was starting, the futures ramped up, and as it went on, they had a massive sell off -- a 200 point downward move.

Markets hate chaos and uncertainty. They want stability and assurance. And last nights debate gave us anything but clarity on whats to come in November.

The Market Is Looking for a Direction

Like we keep talking about, the market is trying to push above that 50day MA, but to have a significant change in direction, up or down, there has to be some stability in the world to latch onto.

We got GDP numbers this morning, showing Q2 GDP is down 31.4%.

Now, that sounds bad, but its better than expectations. And, were expecting a huge rebound in Q3 GDP numbers.

It looks like we are in a V-pattern, a rebound in the marketplace.

So, what can that mean for us traders right now?

An Interesting Trading Vehicle

TLT is the iShares trust that tracks the 20-year US Treasury Bond.

As you may know, there is an inverse relationship between bond pricing and bond yields.

When yields drop, bond prices rise.

When yields rise, bond prices drop.

Going back to March, excusing the covid impact that hit that month, we are basically at all-time highs in TLT. This is because yields are, of course, at all-time lows.

So, to find out about our non-correlated trade on the 20+ Year Treasury Bond ETF (TLT), click here to sign up for the free beta test of the Rude Awakening Pro.

Its getting close, folks, but theres still time to be one of the LAST people to sign up for free lifetime access to this premium service

Thats it for today.

Well talk again tomorrow

Regards,

Scott Stewart

Scott Stewart

Editor, Rude Awakening

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