Chicago’s Quiet, But the Market’s Roaring Higher!

It’s a new season — and stocks are soaring again!

The S&P held super support at 3,200 and continues to extend its rebound move, despite the crash-callers’ autumn warnings.

Yes, the fourth quarter is here — and the noise is louder than ever. It’s all about the debates, the election, and endless political controversy.

But it’s still quiet in Chicago. There’s not much trading flavor in the city right now while the financial district remains shut down. Everything is eerie and empty…

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Not much is happening at a Lincoln Park bar owned by a trader friend’s brother

Thankfully, I can trade from just about anywhere these days. So I’m headed back up to my Michigan lake compound on Saturday for a two-week “break” from the city. I’ll keep you posted on the market’s next big move from there…

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: “Work from Home” tries to rally

Greg Guenthner

The last time we discussed the “work from home” phenomenon, these stocks were rallying to new highs and looked unstoppable as the Nasdaq led the averages higher almost every single day…

But the September correction took a big bite out of this bull. Many of the red-hot work-from-home names corrected hard to start the month, causing a sharp pullback in the Direxion Work From Home ETF (NYSE:WFH):

WFH

But as you can see from the chart, these stocks are starting to recover again. Sector leaders such as Peloton Interactive Inc. (NASDAQ:PTON) and Zoom Video Communications (NASDAQ:ZM) are powering higher. Other quarantine necessities are also catching a bid as the market improves. If this bounce holds, we could see additional gains in this group during the fourth quarter and beyond.

Trading Tip of the Day

I’m seeing plenty of fast-moving breakouts flash across my screen this week. But it’s important to remember that stocks that go parabolic do not correct sideways.

When you see a stock moving into extremely overbought territory and posting a chart that starts to look like a hockey stick, you expect a sharp reversal to appear at some point as too many traders race for the exits with whatever profits they can carry…

Of course, there’s nothing wrong with trying to play a stock that’s screaming higher. But it’s important that you learn to recognize the signs of a stock that’s gone vertical. If you aren’t in these plays for the long haul, it’s best to remain aggressive when taking profits. You’ll rarely nail the top — but you will save yourself a lot of pain (and money) by taking gains off the table early and often.

All good things must come to an end. Eventually, the momentum crowd always abandons these sweetheart plays for the next hot ticket…

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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