Signals & Trading Plan for Thursday 10/31/19

Market context
The Fed cut its fed funds target rate Wednesday to 1.50% to 1.75% today, the 3rd consecutive rate cut this year.

The initial reactions from stock market and bond market were muted.  Traders got a little more excited when Powell hinted at keeping rate low for now, as long as inflation doesn’t surge.  As a result, $SPX $NDX SPY QQQ TQQQ all spiked up in the last hour.

However, Powell did not hint at additional rate cut in December.  And “not raising rate” is not the same as “cutting rate”. The Fed is basically leaving the door open for wiggle room.  They have flexibility to do what they might need to in December: another cut or do nothing.

In looking at the last-hour spike in price, some of us may start to feel the effects of FOMO.  Is it too late to jump on this bullish bandwagon at this point?  Will the market take off without us?

First let’s take a look at how high prices can go in the intermediate term.

The rest of this article covers:
Table of support and resistance levels
Projections based on market internals
Planning your trades

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