Friday’s Watchlist Scores a Hat-Trick Amid Monday’s Sell-off

by | Oct 4, 2021 | Market Updates

China took a back seat last week as Washington’s political dysfunction retook center stage in the headlines… But with the infrastructure bill on hold along with the debt ceiling, guess who’s back in the spotlight? 

Evergrande defaulted on payments this past weekend, causing Hong Kong’s Hang Seng exchange to fall over 2%. 

All of these negative headlines are starting to take their toll, pushing S&P 500 futures down more than 1.5% by midday Monday before closing down 1.3%. 

The Nasdaq had a bit of a double whammy as Facebook Inc. (Nasdaq: FB) was the latest tech firm to get smeared in the headlines.

The social media company is facing claims of burying research about potential negative effects for users as well as not doing enough to halt rampant disinformation on its platforms.

Shares dropped over 5.5% Monday, weighed down by social media stocks, as the Invesco QQQ Trust (Nasdaq: QQQ), which tracks the Nasdaq, fell more than 2% on the day. 

But even when the market goes haywire like it has over the past three weeks, there are opportunities for traders to come away with a win…

The Sell-off and Monday’s Top Outperforming Stocks 

There are some bright spots in Monday’s market. All three automotive names I revealed during Friday’s live event are among Monday’s top outperforming stocks! 

Both Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) shares spiked about 3.5% and 4.5% from their Friday closes, respectively. 

Not to be outdone, our good friend Goodyear Tire & Rubber Co. (Nasdaq: GT) also joins the top outperforming stocks after shares bounced for a nice 8% gain on its two-day rally. BOOM!

Overall, this is a tremendously tricky market to start the week. 

Looking to the internals, Monday’s early trading saw several -1,000 candles hit the $TICK index. 

The index measures the number of rising stocks against the number of falling stocks. So a -1,000 tick means there are 1,000 more companies on the NYSE falling than there are rising out of about 2,800 stocks total. 

It’s a bearish indicator and tells us that institutional investors are pulling their money out of equities. 

Where is that money flowing? While we’re seeing some inflows into Bitcoin and gold names like Newmont Corp. (NYSE: NEM), it’s oil and gas energy stocks that are pumping Monday…

Antero Resources Corp. (NYSE: AR) and Range Resources Corp. (NYSE: RRC) are also two of the top outperforming stocks catching bids after seeing big institutional call buying in recent weeks. 

It takes a lot for me to get bearish, but I don’t like Monday’s price action one bit. Pretty much every rally we’ve seen quickly sold off… 

Any one of these negative headlines on their own would barely cause a blip on the radar, but all of them at once during a traditionally volatile month is starting to add up… 

One event to keep our eyes on this week is Friday’s jobs report. If those numbers disappoint, it could keep the sell-off rolling. 

If things move toward a full-on correction, there will be plenty of opportunity to play the downside with puts and strategies like bear put spreads, so stay tuned!

P.S. Retirement is the modern day nightmare, as anyone approaching it would know…

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And our income isn’t nearly matching it.

So how are we supposed to make ends meet, let alone retire?

These two traders have found the ultimate weekend side hustle to solve this exact problem. One where they’ve seen simple $500 trades placed Friday afternoon turn into $1,625… $2,930… even $3,550.

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WRITTEN BY<br>Lance Ippolito

WRITTEN BY
Lance Ippolito

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