Month of October has not been kind to the markets in the month of October in an election year (In fact, it has been the worst month during an election year, check out the past 15 of them)
Not to mention that Oct. is historic for crashes, big swings etc... Entering October with
1) Potentially dismal earnings,
2) EU woes,
3) Election uncertainty
4) Fiscal cliff worries
5) Global slow down
6) 4 month run in markets based on just easing and the height of complacency (Look at VIX and Call/Put ratio)
7) The market moves in way to hurt most people and I think everybody is expecting an upside move and no more than 1430-1440 on the downside.
Can somebody tell me what is the Bullish case here other the same rant of FED will save us and too many people on the sidelines that will buy the dip. People should realize that a lot of fund managers might have already thrown the towel for year and just will have to live with it.
APPL closed below it's 50 dma today. If Monday turns out a big down day then I would expect AAPL to go sub 650 and in a flash it be @ 644 (Apr-10th High, before the run up to 705) I don't think it will hold, the next level would be 620 (100 dma), if broken then 600.
AAPL generally peaks a week or 2 after the broader market, the leads the decline (Has happened several times in the past) It also tends to bottom first and moves up before the broader market turns.
I'm expecting S&P to get to it's 50 dma around 1422-1426 next week (If some big negative news comes over the weekend, Could happen in 2 sessions or even 1) then a small bounce and eventually give in due to EU, Earnings or other headlines.
If earnings continue to disappoint then testing the 200 dma will most likely happen before the election!
Last but not the least, Watch how quickly the sentiment and the market can turn on you...
If the markets decline that means TPTB have Romney penciled in already. It would be interesting to know how many of those bear October markets during election years resulted in the incumbent President being voted out.
The bullish case is a combined Fed stimulus, European Stimulus, and Chinese stimulus, followed by every other country who can't see it's currency rise more against than the dollar and must lower rates.
If you don't like that you should also note that while the market is at multi year highs it tends to make new ones daily when it is.
Furthermore, whether earnings will be good or bad they will be better than summer time earnings.