Washington punted on the debt ceiling, giving themselves enough room to keep things moving through the end of November.
That’s good news in the short term, though, no one will be surprised if we’re back in this same headline spiral come Thanksgiving.
But the markets have been looking for any excuse to rally, and Thursday saw the major indexes snap back about 1% each on the announcement. If you’re looking for the key market indicator to watch right now, it’s TRIN, also known as the Arms Index or The Trading Index. More on that in a moment…
Small caps, which were getting their booty kicked on Wednesday, made the turn and perked up with a 1.6% rally!
So most of the key market indicators that were out of whack this time last week are largely back where they should be…
That said, there’s still a red flag that more volatility could be on its way.
Why TRIN Is the Key Market Indicator to Watch Right Now
The one key market indicator I’m keeping my eyes on, as I mentioned, is the TRIN — you can find it under the ticker symbol $TRIN. The index measures short-term sentiment by comparing the direction of stocks to total volume.
The index closed below the 0.6 mark on Thursday and opened lower Friday…
It usually can’t stay at or below that level for more than a day.
The longer the index stays at that extreme, the more we can expect some downside pressure on the S&P 500, which makes TRIN one of the key market indicators to watch right now.
If these levels hold, then we could have a big gap down on Monday. If we see the levels stabilize in the “normal” range from 0.8 to 1.2, then that’s a bullish sign.
Traders looking to hedge against a potential downturn can look to buy puts against individual big tech names — like the Facebook Inc. (Nasdaq: FB) puts we saw in Thursday’s Blitz Daily.
If the TRIN turns back up and chop continues, we can look for opportunities in “boring,” low-beta names — one of my favorite areas to target in markets like this is beverages.
Their businesses may not be exciting, but the gains they’ve delivered are!
Both PepsiCo Inc. (Nasdaq: PEP) and Constellation Brands Inc. (NYSE: STZ) delivered solid earnings reports earlier this week.
Then on Wednesday, the Blitz Tracker picked up a trader rolling their profits out of Coca-Cola Co. (NYSE: KO) calls from the Oct. 8 expiration and into Oct. 15, giving themselves another week.
Weekly Blitz Alerts was able to take advantage of the mid-week dip. And when markets recovered the next day, we scored a 57% overnight gain!
So no matter which direction the market takes, there are always opportunities for profits!
Be sure to check out the quick video below and I’ll walk you through how to read some key market indicators — like TRIN — and what they could mean for near-term trading.
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