To The Moon

I have repeatedly highlighted October as a key turning-point window for US equity indices. Whatever the news backdrop, a break below the key trend line should prompt us to consider reducing risk. US indices have yet to see a sharp acceleration in selling, but other markets, including mainland China's A-share market, have already fallen. It is hard to tell whether this reflects a synchronized move across markets or local developments. With most of the news unfavorable, however, temporarily reducing risk is a prudent choice.

$China A50 Index - main 2610(CNmain)$ $Hang Seng Index - main 2610(HSImain)$ $Hang Seng Index - Oct 2026(HSI2610)$ $HSI(HSI)$ $HSTECH(HSTECH)$ $Hang Seng Tech Index - main 2610(HTImain)$

The Federal Reserve meets this week, and markets are already assigning a 90% probability to no further rate hike at this meeting, according to the CME FedWatch Tool. Attention will turn to the Fed's comments afterward and any related developments. The biggest swing factor may be how likely a December rate hike appears. If the probability of a December hike falls, market conditions could improve.

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2612(ESmain)$ $Micro E-mini S&P 500 - main 2612(MESmain)$ $Cboe Volatility Index(VIX)$

How Long Could the Current Market Weakness Last

According to my US Dollar Index cycle model, markets tend to become more turbulent when the Fed enters a rate-hiking cycle. Around the transition between rate hikes and rate cuts, the dollar typically experiences a temporary surge. Historically, this phase has lasted about six months, suggesting that we should expect relatively volatile markets from now through the first quarter of next year.

$USD Index(USDindex.FOREX)$ $Invesco QQQ(QQQ)$ $NASDAQ(.IXIC)$ $E-mini Nasdaq 100 - main 2612(NQmain)$ $Micro E-Mini Nasdaq 100 - main 2612(MNQmain)$

A more favorable trading environment should return once markets begin to expect the Fed to slow its rate hikes, or once the Fed keeps rates on hold for a sustained period. For now, the strategies best suited to these conditions are relative-value trades that exploit differences in the pace of price moves, along with options strategies. Readers unfamiliar with these approaches can look out for Tiger Brokers' forthcoming Futures Handbook. It includes detailed explanations and practical strategy guidance to save you the time and effort of figuring everything out through trial and error.

$Dow Jones(.DJI)$ $E-mini Dow Jones - main 2612(YMmain)$ $Micro E-mini Dow Jones - main 2612(MYMmain)$ $iShares U.S. Real Estate ETF(IYR)$

Could a Break Below 4000 Accelerate the Decline in Gold

During a Fed tightening cycle, the best-case scenario for gold is a period of sideways trading near its lows. Gold previously staged a solid rebound from around 4,000, making that level important support.

$Gold - main 2612(GCmain)$ $E-Micro Gold - main 2612(MGCmain)$ $1-Ounce Gold - main 2612(1OZmain)$ $SPDR Gold ETF(GLD)$

The current futures price action is hardly encouraging and is weaker than I had expected. In the short term, gold remains below its 20-day moving average. It is too early to turn bullish unless prices break back above that average. A break below 4,000 would leave New York gold futures vulnerable to a test of the 3,200-3,400 support zone, implying substantial further downside. Where possible, traders should set appropriate stop-losses and reduce risk.

  $Silver - main 2612(SImain)$ $E-mini Silver - main 2612(QImain)$ $iShares Silver Trust(SLV)$

Could Oil Face a Squeeze Ahead of the Midterm Elections

A squeeze is a futures-market situation in which traders holding long positions believe that short sellers will be unable to deliver the required amount of the physical commodity at expiry. They use their financial firepower to buy futures aggressively, inflicting heavy losses on the shorts. The reverse can also happen, although squeezes of short sellers are more common.

With US-Iran negotiations making little progress and the midterm elections approaching, could bullish traders seize the opportunity to drive prices higher? If so, oil price swings could intensify, and investors need to be mindful of the risks.

$United States Oil Fund LP(USO)$ $Marathon Petroleum(MPC)$ $WTI Crude Oil - main 2612(CLmain)$ $Natural Gas - main 2612(NGmain)$

For those looking to trade such a move, a better approach than buying futures outright is a calendar spread: buy a near-month contract and sell a later-month contract. This can keep losses relatively more manageable if the market reverses. Another approach is to decide in advance how much you are prepared to lose and buy a small options position as a speculative punt, much like buying a lottery ticket. That makes it easier to define the risk upfront.

A squeeze is only a possibility, however. One or two news headlines could bring the move to an abrupt end, so any position should be taken cautiously.