The market is recalibrating itself. Volatility is high, which is normal for October, but I’m not seeing a clear directional bias. There’s no major catalyst causing stocks to move lower. Bonds and stocks have been choppy and could continue that way in the short term.
So I picked out long and short trades, including options picks, to take advantage of this volatility — and more in Wednesday’s stock market recap.
Stock Market Recap
In Wednesday’s stock market recap, we take a look at positive economic reports and market internals.
The Institute for Supply Management survey was released on Tuesday with an index of 61.9, dropping more than two points from August. The cooldown is expected to continue but the figure was better than expected.
The ADP Employment Report came out Wednesday, giving a good estimate of the Employment Situation report scheduled for Friday. It’s a monthly measure of U.S. nonfarm private employment, and 568,000 private-sector jobs were added in September, beating analyst forecasts.
The put/call ratio is stretched to the downside and signalling a reversal in stocks. Momentum levels have moved lower since May and aren’t giving much more space for downward moves. October is known to be the most volatile month of the year and we should expect more choppiness.
Roger’s Radar: 1 Short and 1 Long Trade for Wednesday
As stocks move lower and if pandemic complications continue, people will look to save money. One of the ways they usually do this is by not going out to eat as much.
The long trade is on Albertsons Companies Inc. (NYSE: ACI). ACI is coming off recent highs and has fallen to its 50-day moving average. We could see the stock pull up from here considering current market action.
The short trade is on one of the largest industrial equipment distributors in the U.S. It has been on a strong downward trend but has pushed up to its 50-day moving average. This stock looks like it will continue to break down. Check out the video to get the call option trade on ACI, and the put option on my second stock.
In this video, you’ll discover why the market is moving sideways… what the put/call ratio is forecasting… what momentum levels are telling us in the bond market… if there’s a directional bias in the stock market… and the top long and short trades for Wednesday.
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