To The Moon

Waiting for confirmation after the October selloff

The 16 October close reminded me that one strong rebound is not enough to confirm a market low. Thursday’s recovery had made a washout bottom look plausible, but Friday’s selling put that idea back under pressure. My takeaway is to stay flexible: a promising explanation still needs price to support it. These are my planning reflections, not a record of orders or fills.

What interested me most was the difference between the headline indices and the average stock. Technology weighed heavily on the broad market, while the equal-weight S&P 500 held up better over the week. That distinction matters to me. A weak index does not mean every sector is equally weak, but strength elsewhere does not automatically make the market safe to buy.

Semiconductors remain an important test. After a sharp decline, an area of support can attract a bounce without ending the correction. I want to see whether buyers can defend that area and sustain a recovery, rather than treating an intraday rebound as confirmation. The weakness in technology also makes me cautious about assuming that familiar AI names will quickly resume their earlier trends.

My first decision is about risk, not finding another opportunity. STNG is a useful reminder of why an exit rule needs to be decided before a trade becomes uncomfortable. If a setup loses the support that justified it, I would rather reassess promptly than keep extending the original argument. A view on the wider sector cannot replace a rule for the individual position.

My second decision is to keep relative strength separate from an entry signal. IWM could hold up better than technology if rates and credit conditions become more supportive. But outperforming QQQ could still mean falling less, rather than making money. I would want small-cap support to hold and the rebound to develop before treating that relative-strength argument as enough on its own.

Gold miners are another area worth watching. GDX’s ability to recover from lower levels caught my attention, but I still want follow-through. I am more interested in how these areas behave during market weakness than in chasing whichever name produces the strongest single-day bounce.

Earnings add another reason to be selective. Before considering an option entry, I want to check the company’s reporting date and understand whether the intended holding period crosses that event. An attractive chart does not remove the possibility of a sharp overnight move.

My focus is to protect against a failed setup, watch where support actually holds, and let the next entry earn its place.

*Options involve substantial risk and may not be suitable for every investor.*