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Posted October 15, 2020

Scott Stewart

By Scott Stewart

M for Murder, V for Victory

Welcome to todays Rude Awakening

And welcome to a market shift (potentially).

Jobless Claims Jump, Market Falls

Almost 900,000 jobless claims were filed last week, overshooting the projections by a long shot.

We obviously still have problems in the economy due to the coronavirus pandemic, and the ripple effect its had.

And now, after all the pushing the market has been doing up and up over the past several weeks

Were seeing a correction at market open.

The topic for today is

Double Tops

In analyzing the markets, we see double bottoms and double tops.

Investopedia gives us a simple definition for this:

A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs.

In this case, the asset is the S&P 500.

Looking at chart patterns, the saying goes, V is for Victory, M is for Murder.

If you remember, Ive been talking about the V pattern we were seeing in the marketplace. This was a bullish indicator that would imply the market was correcting to the upside after a downward trajectory.

Now, the chart pattern is taking an M shape

IMG 1

You can see where Ive lined up the crosshairs to show that double top.

We are seeing this same pattern across all the major markets: the S&P, the Dow, the NASDAQ, even the small caps Russell 2000.

Are we in for a downward move in the marketplace?

It certainly looks that way today.

The question is, will we break down below the 50day MA once again?

Looking at the Monsters of Tech

We of course want to check out the Monsters of Tech, the stocks that lead the NASDAQ and the overall marketplace.

They are all down today.

But, that doesnt mean we cant trade them!

In the Rude Awakening Pro, we set up a high POP, bearish trade on Amazon.com Inc (AMZN), for implied returns of 3% in just one week, or 160% annualized returns.

Its a trade that stands to make money whether the stock falls further, middles out, or even goes up somewhat.

We did this using options.

If you want to learn more about our Pro level trades, you will be able to sign up for our Rude Awakening Pro service very soon

But for now, thats it for today!

Have a great rest of your trading day, folks.

Well talk again tomorrow

Regards,

Scott Stewart

Scott Stewart

Editor, Rude Awakening

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