In this article:

• Powell still on the mind of the stock market
• Expecting new market lows ahead
• Picking out possible trade opportunities

Back-to-back days of selling were followed by a shaky stock market opening session today.

Expectations are for the downward movement to continue with opportunities for traders willing to dig a little deeper.

Powell speech still bringing market down

Selling continued Tuesday as all three major indexes opened by falling hard before a slight mid-morning uptick that didn’t recover earlier losses.

This downturn is a continuation of heavy selling Friday. The fast gap down followed remarks from Federal Reserve Chairman Jerome Powell. He emphatically held to hawkish plans going forward in his speech at the 2022 Jackson Hole Economic Symposium.

Upwards of $80 billion has evaporated from the equities market after his calls for continued stern monetary policy that includes raising benchmark interest rates.

Simpler’s traders are expecting the stock market to move even lower before all the market fear dissipates.

“We are seeing a lot of reasons for this market to go lower,” said TG Watkins, Director of Stocks at Simpler Trading. “I think we are going to be making some new lows.”

Expecting new stock market lows

TG doesn’t expect new lows to arrive quickly, but is anticipating the market stair stepping to the downside.

TG has focused on the S&P 500 (SPY) to follow market movement. Key chart levels he is watching are the monthly 10-day simple moving average (SMA), weekly 50-day SMA, and the daily 200-day SMA. 

Another area TG highlighted is the SPY not testing the monthly 50-day SMA, weekly 200-day SMA, or lower 3rd average true range (ATR). Since the market hasn’t moved to these lower markers, there is the possibility the market isn’t done falling in the near term.

TG shared insight into possible short-term positive signals in UVXY – the ProShares Ultra VIX Short-Term Futures Exchange Traded Fund (ETF). In the middle of the gap down today, UVXY was up as high as 2.18% mid-morning.

He sees this as possibly the beginning of a move that could continue higher, and is watching this long term.

TG is also looking at wheat, the United States Natural Gas Fund (UNG), and Energy Fuels, Inc. (UUUU). He sees these, and other commodities, as possibly “needing a break” before moving higher. Both UNG and UUU were down mid-morning.

TG is watching the energy funds, particularly UUUU, as U.S. and world economies such as Japan begin rethinking nuclear energy use in the midst of a global energy strain.

How long, or higher, these assets can go to the upside is up to the market, according to TG.

For traders wanting to get into this market movement to the downside, TG is watching for shorts in key stocks. He cautioned that this is a risky environment on the short side.

“If you’re going to be trading anything in this market, be nimble and don’t overstay your welcome if things start to change,” TG said.

Learn to stay ahead of shifty market

How do traders make winning trades in a shifty market?

TG Watkins recently hosted a free webinar to show how he catches “drops and pops” when the market shifts. TG focused on what Wall Street won’t reveal about bear markets (and why); why “buy the dip” has failed traders; adding a benefit to trading with “deflating” stocks; and why traders could be missing out when the markets fall apart.

Watch the replay (for a limited time) which ties into current market conditions.