The trouble for traders in this stock market is price action that could go either way at any time – a trend lower or higher just won’t settle into a more defined pattern.

This forces traders to constantly adapt to market reactions as new information influences the movement in the form of economic data or the ongoing earnings season.

Any number of trading scenarios could break out, and the options for traders are as hot and cold as any point in this volatile trend.

Stock market rally pushes higher for second day

The stock market jumped out of the gate today with the pedal to the metal and then abruptly switched to cruise control in a slower speed zone.

All three major indexes were up early, with the Dow showing early strength before retreating heading into midday trading. Across the board the market fought through the choppy session – laced with varying third quarter earnings season reports – and closed higher for the second day in a row.

In the market today, the Dow closed at 30,523.80 points to rise another 1.12% (adding 337.98 points on the day). The Nasdaq rose to 10,772.40 points for a .90% gain while the S&P 500 jumped 1.14% to 3,719.98 points.

Apple, Inc. (AAPL), considered a bellwether stock by Simpler’s traders, took an early hit on news it would slow production of its latest smartphone release. AAPL regained its footing and closed at $143.75, up .94%.

Apple stock has experienced rocky price action since the end of September, adding to a steady decline since mid-August. Apple is down from $182.01 since Jan. 1 after growing over the previous two years, rising from a pandemic low of $57.21 in March 2020.

Apple has extensive overseas operations and is seen as susceptible to the ongoing 40-year high inflation in the United States, a common concern among U.S.-based international companies.

Simpler’s traders follow Apple as a possible signal of an overall market shift. Apple is a technology leader and influential stock across all three major indexes.

One earnings report could impact entire market

The stock market can experience significant movement based on just one earnings report, according to experienced traders. They suggest that traders should prepare for the market’s potential reaction to earnings reports, which could result in a wide range of price action.

Wall Street, in particular, pays close attention to these reports to see how companies are performing. Experienced traders who use technical analysis, will be watching the price structure of the E-mini S&P 500 (ES) to predict potential moves up or down.

Traders will pay close attention to movements towards prior lows of the year, such as the $3,571 low in June and the new low of the year set at $3,502 last week.

Any downside movement below these levels and the market could slip further toward pre-pandemic highs at $3,397. 

Experienced traders suggest that traders should remain patient, smart, and open-minded in the face of market volatility. They recommend understanding how to move within trading ranges and take advantage of key levels to maximize returns.

The market can experience significant fluctuations, so traders should be cautious and strategic in their approach.

As this market continues to gap and rally, Simpler’s traders are following the action day by day in the Options Trading Room.