October 20, 2025

(FEAR AND UNEASE HAVE GRIPPED THE MARKET – WILL THE BULL REMAIN IN CONTROL?)

October 20, 2025

Hello everyone

WEEK AHEAD CALENDAR

Monday, Oct. 20

10:00 am U.S. leading economic indicators (Sept.)

Earnings: Steel Dynamics

Tuesday, Oct. 21

9:00 am Fed Governor Christopher Waller opening remarks

Earnings: EQT, Capital One Financial, Texas Instruments, Netflix, Philip Morris International, Nasdaq, Coco-Cola, Halliburton, PulteGroup, General Motors, Equifax, Elevance Health, Danaher, RTX, Northrop Grumman, Lockheed Martin, GE Aerospace, Quest Diagnostics, Intuitive Surgical

Wednesday, Oct. 22

4:00 pm Fed governor Michael Barr speaks

Earnings: O’Reilly Automative, International Business Machines, Las Vegas Sands, Lam Research, Kinder Morgan, United Rentals, Tesla, Raymond James Financial, Packaging Corporation of America, First Energy, CME Group, Boston Scientific, Thermo Fisher Scientific, Hilton Worldwide Holdings, AT&T, GE Vernova

Thursday, Oct. 23

8:30 am Initial jobless claims

10:00 am Existing home sales

10:00 am Fed Vice Chair for Supervision Michelle Bowman testifies

10:25 am Fed governor Michael Barr speaks

Earnings: Baker Huges, Newmont, Ford Motor, Digital Realty Trust, Deckers Outdoor, Intel, Norfolk Southern, Health peak Properties, Union Pacific, T-Mobile US, Valero Energy, Hasbro, Honeywell International, Tractor Supply, PG&E, Freeport-McMoRan, Blackstone, Southwest Airlines

Friday, Oct. 24

8:30 am Consumer Price Index (Sept.)

8:30 am CPI year over year

8:30 am Core CPI (Sept.)

8:30 am Core CPI year over year

9:45 am S&P flash U.S. services PMI (Oct.)

9:45 am S&P flash U.S. manufacturing PMI (Oct.)

10:00 am Consumer sentiment (final) (Oct.)

10:00 am New home sales (Sept.)

Earnings: General Dynamics, Procter & Gamble

CAUTION AND COMPLACENCY ARE TWO PEAS IN A POD

Jamie Dimon is on edge.

He is worried about the economy, and the risk of a massive sell-off in stocks, which, he believes, could happen within the next six months to two years.

Dimon also notes the credit risk lurking in the economy.

Last Tuesday, JPMorgan announced its earnings, and Dimon pointed out that the bank had a take a USD$170 (AU$262) million write-offs in the third quarter related to the bankruptcy of subprime auto lender and dealership Tricolour.

He also added that the bankruptcy of auto parts maker First Brands points to other credit problems looming in the economy.

Dimon believes the current environment is unusually volatile and suggests that some of his peers may be complacent.

AI is creating not only disruption, but also unease.

This sense of foreboding coupled with America’s awkward relationships with other Western powers, and unrelenting inflation make the U.S. quite an erratic player, and therefore less dependable, as Dimon argues, when it comes to the world stage.

ARE WE THERE YET…AT THE TOP?

You would think that credit concerns, a government shutdown that drags on, and a recent sell-off in the S&P500 – the biggest one-day meltdown in six months would be enough to change market structure and flip markets into a bear trend.

No, it’s not happening yet – the bulls are still in control.

So, what needs to happen to change the picture?

The buyers and sellers in the market need to change their behaviour. In other words, a correction will only be confirmed when the index fails to make higher highs – resistance zone is respected, and support zones are broken – meaning buyers are no longer buying at that price.

If the S&P500 falls below the mid-September low, at 6,550, before the index can make a higher high, that would confirm a pullback could be taking place.

If support were to give way first, it would create a “head & shoulders” pattern on the index.

The initial measured-move target would be 6,335.

A correction – usually defined as a 10% to 20 move from a significant high – would start if the S&P500 falls to 6,088.

As Dow Theory reminds us, the trend remains in place until market structure has been broken.

Be prepared just in case the signal starts flashing.

MARKET UPDATE

S&P500

We’re likely to see more choppy price action in the index. There is support around 6550 area. Any strong break or close below this area could change the market structure and see a larger rolling over. In other words, this would mean a top in the market for at least several weeks/months.

Conversely, if we stay above the support area, even if we show messy price action, there is scope for us to see more rallies in this market.

Resistance: 6695/6700; 6760~

Support: 6585 area

GOLD

As we have all seen, gold has been surging but took a breather last Friday after reaching $4281. The shiny metal is in very overbought territory (which is nothing new), but the pattern shows no immediate signals of a reversal yet. So, bias remains to the upside.

Resistance: $4370 – $4380 area

Support: $4180/90 and $4085 area

BITCOIN

Bitcoin has fallen since making the new high on October 6 (126.3k). The market has bounced off the lows, but I would expect any rally (which could last one to two weeks) to be corrective (bullish false break), before resuming the trend lower.

Resistance: 109/110; ~115 & ~118

Support: 103.5k (recent low), 105/106k

STOCK REVIEW

I am quite bullish on three stocks at the moment provided they do not close below certain levels.

Microsoft ($513.58) A close below $480 would change my bullish perspective.

Tesla (earnings this week) ($439.31) A close below $400 would negate my bullish view.

Netflix (earnings this week) ($1,199.36) A close below $1,125.00 would question my bullish outlook.

If earnings were not taking place this week on these two stocks I probably would have sent out a couple of option trades.

HISTORY CORNER

On October 20