Week of 10/9/23 Market Plan

Continuation or Trap?

The market provided us with a narrative on Friday. That narrative, in my opinion, is that the selling is done (for now), and we’ve reached peak rate fears for the immediate term. The question is whether or not this narrative is legitimate. After the HEADLINE NFP print came out hot (underneath the surface it was actually quite horrendous for the labor picture and economy), markets liquidated hard, DXY ripped, and bond price (remember inverse to yields) tanked. As ES found support at the expected 4239.75-4243.25 range, DXY and yields began to retreat (ZN- 10 year bond price began to recover). This was the market’s early signal that the selling might be done. The analogy would be stocks often bottoming on bad news or bad earnings. If price just doesn’t want to go any lower on terrible news then it’s probably going higher. It really is as simple as that sometimes. In this instance DXY and yields were done going higher on the initial headline hot print.