EB Daily Market Report - Quick Update - Thursday, October 3, 2024

I only want to discuss 3 things today.

Volatility Index ($VIX)

The stock market still resides very near all-time highs, especially on the Dow Jones and S&P 500. While the NASDAQ 100 still has plenty of upside to reach its all-time high from July, this index of large-cap growth names has still enjoyed a solid rally off the August 5th low. Despite this strength, the VIX has moved back above 20 today. There's a LOT of nervousness ahead of tomorrow's jobs report. This does not mean we'll see bad numbers, but it does mean that our major indices are very UNLIKELY to handle bad news well. If the jobs number comes in below expectations, and especially if the number is negative, we could see a significant drop. This doesn't change my long-term bullish stance at all. But with the rest of October still ahead of us, along with the uncertainty associated with the Presidential Election, now just 4-5 weeks away, it's certainly reason to at least recognize the short-term risk.

Short-Term Bearish Technical Pattern

We're an hour from today's close as I write this, and our major indices are hovering close to their lowest levels of the past two weeks. We've been trading sideways after the gap higher we saw the day after the Fed announcement where the fed funds rate was lowered by 50 basis points. A gap down tomorrow after the jobs report would confirm island cluster reversals on the Dow Jones, S&P 500, and NASDAQ 100:

Dow Jones:

S&P 500:

NASDAQ 100:

These 3 charts are all set up the same and all have what appear to be island clusters. Gaps below the low points of island clusters typically lead to further selling. The S&P 500 chart has many sustainability ratios on the panels beneath the price chart, simply to illustrate that these ratios are generally declining, indicative of Wall Street being cautious currently.

I have no crystal ball and cannot tell anyone whether it's best to be invested or in cash. Everyone understands their own risk tolerance levels much better than I do, so you simply need to decide how much risk you're willing to take.

Seasonality

I'm nearly done the October Seasonality Report, but I wanted to at least pass along 5 stocks that are historically strong in October and very likely to be included in our Top 20 Seasonality Stocks for October 2024:

• Netflix (NFLX)
• CBOE Global Markets (CBOE)
• Nasdaq OMX Group, Inc. (NDAQ
• Intercontinental Exchange Group (ICE)
• Marathon Petroleum (MPC)

Happy trading!

Tom