7 Signals To Track Stock Market Moves

In this article:

• 7 stock market signals to follow
• Keeping an eye on Apple
• Playing cautious calculations

Today closed out the worst half of the year in the S&P 500 since 1970, and the question on traders’ minds is, “Will this continue into the second half of 2022?

The debate rages on whether this market will recover like 50 years ago or continue lower into the end of the year.

Traders are facing a new normal where they must stay focused on the market daily or miss a fast move quickly turning against them.

Track these 7 stock market signals

Friday kicks off as the first day of the month going into a long weekend which, historically, leans toward bullish market movement.

But this has been a wholly unpredictable market the last few days. Working through this volatility means traders will have to have in place a trading plan to stay on top of their game. Improperly managing risk in a trade setup in this bear market can be costly.

Part of staying on top of market action includes focusing on fewer trades and consolidating helpful data.

Here seven market signals for daily review among Simpler’s traders:

• Data reports – Each report can place different pressure on the market. Traders can follow historical market reactions to positive or negative reports and develop trading setups. Key data releases include, but are not limited to, labor, consumers, payrolls, and banking, such as the U.S. Producer Price Index (PPI), U.S. Core Personal Consumption Expenditures Price Index (PCE), Consumer Confidence Survey®, ISM® Report On Business® – Manufacturing (PMI®), Job Openings and Labor Turnover Survey (JOLTS), Nonfarm Payroll (NFP), and U.S. Retail Sales report.
• Newsworthy events – Helpful news, not the mid-morning financial hype, can come in the form of announcements and meetings. These can be related to U.S. institutions or foreign entities. Watch for the U.S. Federal Open Market Committee (FOMC), U.S. Treasury, and foreign central banking, including Canada, Great Britain, Australia, and the European Union.
• Interest rates – Rising interest have sent the stock market into a frenzy this year and more raises are expected in coming months. Note the historical market reaction and specifically compare what the market expected compared to what the Federal Reserve (Fed) actually approved. Higher interest rates have a broad effect in the economy from small to large businesses, among consumers, and how governments can pay debts (think bonds).
• U.S. dollar – The U.S. dollar may not be getting much play in news headlines, but its strength has become a test catalyst for market movement among traders. The U.S. Dollar Index DXY was formed in 1974 and measures the value – rise and fall – of the dollar relative to a collection of foreign currencies related to U.S. trade partners. Traders watch whether the dollar gains strength against this “basket” of foreign currencies whereas the index rises and if the dollar weakens the index falls. Also, consider keeping bonds in mind relative to the dollar.
• Commodities – Crude oil appears to be the “last standing” commodity with any strength, although it is weakening. Others, such as copper and wheat, have tanked in value recently and are worth monitoring for movement in the commodity and the overall market.
• “Fear Indexes” – The Chicago Board Of Exchange (CBOE) Volatility Index (VIX) has been extremely high in recent weeks along with the VVIX. The VIX index anticipates market volatility over the next 30 days. The VVIX – essentially the fear index of the fear index – measures volatility of price in the VIX. A basic trading strategy when watching the VIX is – VIX high, buy; VIX low, don’t buy.
• Apple (AAPL) – Simpler’s traders have held Apple as a canary in the coal mine for this bear market. If Apple falls, the broader market may get hit harder. Apple is a leader in the technology space and a high-value stock within the Dow, Nasdaq, and S&P 500. Apple grew from a pandemic low of $57.21 in March 2020, but is still down from $182.01 since Jan. 1.

As traders work through this data, an important skill to apply is not trading based on emotion.

Traders working from an emotional standpoint tend to be on the wrong side of market moves.

Trading futures in this bear market

Futures trading is a strategy to expand a trading portfolio as the market chops along in neutral.

Traders who are learning futures trading or are seasoned veterans can always use extra insight to apply strategies to navigate an uncertain market.

Gain access to live-trading sessions where you can trade with a professional, get real-time trade alerts, and study the learning center to build personalized strategies in the futures market.

There are futures trading learning opportunities at Simpler Trading.

Keeping an eye on Apple

While keeping an eye on the AAPL canary, a potential setup emerged heading into the holiday weekend.

The market presented the possibility of rallying into the long weekend after another day of selling on Thursday. This sets up a bullish potential setup in AAPL if support levels hold through the open on Friday.  AAPL closed at $136.72 on Thursday, down 1.8%).

Simpler’s traders are following a squeeze setting up with Apple following along with movement in the S&P 500. If support holds and Apple breaks through upward resistance, the weekly options could be traded with a put-credit spread.

The market has been wild, so the Friday open could quickly change this possibility.

Why trade alone in this chaos?

Trading requires learning skills and diligent research, and at Simpler Trading we understand the time commitment to trade well. We started the Simpler Free Trading Room to help traders find out more about who we are in the world of trading.

Try the room today and get access to the trading insights and free classes so you don’t have to trade alone.

Maintaining cautious calculations in volatility

The dominoes that have to fall for this market to turn bullish again all center around inflation.

The monetary powers – the Fed – said this week they are just now understanding how much influence inflation has on the economy and the market. So how much influence, much less control, do the monetary influencers really have over how these dominoes fall into the end of the year?

Traders must step up their trading plan in an effort to follow, analyze, and act upon all available information that could reveal the next potential setup.

Cautious calculations are key in this volatility.

The Simpler Trading team delivers a daily dose of reviewing current market action, so why not take a look at trading with our team?