Stock Market Crash in October? Why I Don’t Buy It

Is a stock market crash about to unfold here in October? Many investors are thinking it will in the coming weeks and I'm here to deep dive into the technical analysis and data to see if it is supported. All right. So, number one, what we have to recognize is that October historically has been when we've seen major crashes and major market declines. I want to show this graphic real quick. It's a pretty incredible one. The month that breaks markets, the 1907 panic. This is actually what triggered JP Morgan back in the day to bail out the stock market and ultimately began the Federal Reserve. Right? 1929, Dow falls 89%. All right? Then you have 1987, Black Monday, 1989, Friday the 13th, 1997 down 7.2% trading halted and 2008 worst week ever on record, down 18%. This is when Lehman failed, panic spreads and everything changed. So bottom line is what we know is October tends to be a very violent and potentially negative month. And certainly what we've seen thus far has set the possibility in motion we could be on the verge of this. But do the charts confirm this? Do the charts tell us that this is the likely scenario? That's what we're going to unfold. Now, before we do that, just a reminder here, folks. If you want to pay 10 bucks a month to get into Gareth's Top Squad, you get a live Q&A. I'll be doing one Monday or Tuesday this week. Exclusive videos just to members of Gareth's Top Squad. I'm going to be doing one today. And in that video will be an epic discount 50% off on something at verifiedinvesting.com. Every week I do another coupon code for verifiedinvesting.com. In addition, swing trade alert posts. All right, on YouTube, so you get them right there on YouTube. And last week, I did one on as just before it snapped back 10% the very next day. Pretty remarkable trade alert right there. And that's all again right here on YouTube. if you are interested at 10 bucks a month and also it's a way to support the channel. If you like what I do, if you like what people here are creating, the the graphics, the different things that I'm able to do for you guys, then 10 bucks a month does support the channel. All right, so let's get into it, guys. Let's start out with the NASDAQ here. And if we take a look at the NASDAQ, the NASDAQ dropping as much as 4.5% last week, ending the week down 2.14%. And this again was on the back of Coreeave and the AI trade. And what's so interesting about this and this is Coreweave here and you can see what a nasty week it was. I mean just going back to October 6th the stock has dropped 34.34%. Right? So 35% draw down in essentially 10 trading days when you look at what Friday's date was to the 6th of October. Now, the kicker here is this, and many people don't understand what's going on, is that these companies, they've taken on so much debt, and Corweave is the poster child for this, and essentially that debt is unsecured, meaning that there's nothing backing it. It's just like, well, I hope they make money so that they can pay back this debt. And essentially, that's what what happens is there's credit default swaps. And essentially, that's insurance on whether or not they will pay this money back. And so, think about it like this. you're buying the insurance to make sure the company's able to pay it back in the form of a credit default swap. Now, what's been scary here is that last week we saw the premium being charged on a yearly basis to hold that credit default swap or buy that insurance at 15% interest rate or 15% rate. that is astronomically high and it is a warning sign to all of these players that have bought crazy amounts or taken on crazy amounts of debt. And that's sending the market into a panic. Essentially, what it's telling you is that more and more insiders are saying that they don't believe these companies will all survive and that a lot of this debt will end up blowing up and being worthless. All right, so that sent the market into a tail spin. Coreweave obviously the poster child of this but if we take a look at Cororeweave a couple things so down here's a level that I'm looking at but what I thought was interesting here is we did kiss this key technical level on Coreweave now again like I said if you look and this is by the way kind of a conturian view in that many retail like if you go on social media many retail investors are predicting a crash on Monday coming right up. I'm in the camp that we could gap down, but I actually think you'll see a rebound here in that trade. Number one, generally when you see a lot of people predicting something on social media, it doesn't come to pass. It's very rare that crashes come when retail expects it. It's more the other way around. When no one expects it, that's when something fails, right? And so, I think that's an important aspect. In addition, these type of moves, we're going to see a lot of factors this week. And I do think that with the president and the midterms looming, the the plunge protection team will be on high alert. Now, many people saying, "Man, what's the plunge protection team?" The plunge protection team was created during the Nixon admin uh excuse me, during the Reagan administration. And you can look this up, but essentially it's it's essentially big banks, mega banks, and the Federal Reserve. and their job is to not allow massive crashes like the 1987 crash which formulated the plunge protection team or brought it into existence. And it's not to say that they won't let the markets go down 2 or 3%. They're not in there to step in every single time the market drops 2 or 3%. Because they don't have the funds to do that, but they are in there to make sure that if things get crazy, like it looks like a crash is going to happen, they will come out with bazookas and make sure that it doesn't or at least attempt to make sure that it doesn't. So, with the midterms and the president in the position that he is, it's very unlikely we will see an actual stock market crash before the midterms. All right. Now, having said that, is it possible we could be down two or 3% again? Absolutely. That's a run-of-the-mill kind of pullback uh to nasty day, but historically, that's not super unusual in the markets. Now, if we go back to the core chart, corewave here is telling me that we potentially could open lower tomorrow into this line and then we could actually bounce up here. You can see hitting, bouncing, bouncing, kind of kissed it here. Hit again and hit again. Slight descending trend line right there. And also there's a little bit of a pivot like maybe we gap down. I could see a gap down on coreweave maybe here to around 54, maybe even touching gap fill at 51. But I'll tell you this, I'll be a buyer down here. There's no doubt about it. If we open down in that range, and by the way, that would be about a 10% decline if we got down to this lower trend line, which actually considering Coreweave was down 12% on Friday, that would actually be down about the same amount, a little less than that to get to those levels. All right, so again, down about 11 12% would get us into this lower range. If we were to go here, it would be about 10%. So 10% 12% give or take in terms of the decline. Now, if we look at other stocks out there, Micron has already broken down, but it's already come down significantly. Now, again, same thing with Micron. I could see Micron maybe retesting here, right? This 735 level. You also have a little bit of a pivot right here at 786, but unlikely it's going to just blow through this low without a short-term bounce. Now, is the longer term on Micron broken? Yes. This is a chart that is now broken. This is the long term from basically the beginning of the massive run. Now, this this was a nice little bull market, right? Kind of went up, then went sideways for a bunch, then fell back, then it broke out. This is the bull run. There was your first pullback. This was your second, and then it broke down. And this is a big breakdown right here. This tells you that these are likely multi-year highs on Micron. Now, it doesn't mean you can't retrace and go back up here, but now I'm looking absolutely to be a shorter at these levels all the way up here. All right, SanDisk, same thing. Now, Sandis, what's interesting is this one's actually at technical support. So, we have to watch and see, does this hold? But it's actually at support here. Now, going back to the NASDAQ, let's really look at the NASDAQ composite here because this is the one that's going to matter. So, number one, what you have here is an interesting trend line here that has been broken. So, the NASDAQ to me is the one that you have to be more concerned with in terms of has it put in its multi-year high already? I actually think it has, and I know that might be shocking to many. Now, on the S&P, I still think there's a little bit of potential for further upside to new all-time highs to about 8,000, which by the way is only about 3% upside. So, it's not like I think there's a lot of upside in the S&P. But what we've seen this week is the S&P has only went down. When the NASDAQ dropped 4.5% this week, the S&P was down basically less than a percent, maybe a percent. And so what we're seeing is that if the NASDAQ bounces, the S&P likely gets a bigger bounce and can push up. And the key in the S&P is the diversification. If you look at names like I mean heck, you could look at um you know, names like like Clorox, I've talked about that one many times with you guys. Um even like names like Nike have performed amazingly well ever since they had those bad earnings. It's gone straight up. But you can also see like ABBV. I mean, look at some of these names here that are are key S&P players. And by the way, ABBV hit a major resistance up here on Friday. But look at this chart. Incredible. But I actually love this on the short side now, which makes sense. If tech is going to get a bid, maybe this one pulls back. The point is again is that the 500 stocks in the S&P, it's much more diversified versus the NASDAQ or the NASDAQ 100 that is so concentrated in the tech trade and the AI trade specifically. That's the problem there. It's the AI trade specifically. So again, going back to it, if we go back to the NASDAQ again, potential for a little bit more downside here, maybe on a gap down, but you're going to come right into support right in this range right here. In fact, this would be first support to watch on Monday, right around 26,000. If that breaks, it does open the doorway to a bigger move down to about 25,000. But what's interesting is if we go to the S&P 500 here, the S&P 500, we have our resistance. This is kind of my max bull bull market upside. and it's just proven itself over and over again rejecting seeing price getting rejected. So again, what we can see here if we go here from our all-time highs, look at this. We're down 2% off the all-time highs on the S&P. That's with just this week the NASDAQ being down. I think the NASDAQ's down from its all-time highs, at least the NASDAQ 100's down about 8%. But the idea being is that number one, we're still in an uptrend on this. And you could still see that the S&P has kind of a bullish flag pattern con uh uh putting in being put in right here, right? Up move inside bar. Now again, if we were to break below this, yes, I would start to get a little concerned. But look, we still have a long way to go before we even get down to that level. In addition, one other thing to kind of monitor here, we can see right here, there's this trend line. Look at this. Look at what the S&P tagged. low pivot, low pivot, and look at what we tagged on Friday. So, this is a key point coming into Monday. If we open below it, that's one thing. I want to see if we close below this on Monday or do we rally back up and closed back on it on Friday. You can see we were right to the line and then by the end of the day, it lifted up. S&P was down 1.1% on Friday, which again was a decent drop, but it's not the massive drop overall that the NASDAQ is seeing. So, just to give you my game plan for Monday, and I don't want to keep you guys too long here, but my game plan is number one, I don't buy it that we're going to have a stock market crash. All right, that's number one. I don't buy it. Um, too many retail folks thinking that with the fear, etc. Um, and again, with the plunge protection team, uh, out there lurking if we were to start to see it in the near term and the fact that the midterms are coming up, it's very unlikely we'll see it. Now, again, doesn't mean we won't have the futures down sharply tonight. potentially. We'll have to see where they open. Also, we have to watch oil. Oil's obviously been a big player here in the overall market action. Okay, so that's number one. I don't I don't buy into this October crash, not on a midterm year um in going into the elections in literally two weeks, right? Number two, I actually think if we see Cororeweave gapping down, if we see other names gapping sharply down like STX, Seagate Technologies, I will actually be buyers on the gap down. I will start to buy and accumulate as they come into key levels for a retrace. Generally, crashes happen at the end of bare markets or at the end of a rundown. At this point, we are only at the midst or early stages of the corrective move in the semi AI trade. So, it's very unlikely we'll get that crash uh on that. So, I'm a buyer on the gap down on Monday should we get it. I'll keep you guys posted on that quickly. Just looking again, we can look at oil real quick here just to quickly go over that. Oil again had a big move up last week net from about $89 to about 99. So, big move up. There's a gap fill approaching on crude oil here that I'll be watching very closely. Um but I I actually have started nibbling on Friday on a short on oil. So, I'm looking to short and I am short oil here. All right, natural gas. We're not going to go over that. If we look at quickly on gold here, gold is barely holding on, but it's still holding on to its key support. So, that's nice to see on gold, but the question is, can it hold this week? And silver got a good bounce on Thursday, but it did break and confirm. This did come into this key support. Can it hold $55 this week? These are all questions that I'll be following. remember live my live game plan Monday through Friday at 9:00 a.m. Eastern time where I go over all of the action, the trade setups that I'm looking for for that day. And don't forget to join my Gareth's Top Squad. I'll be putting out a video for members in just a little while later today with that 50% off coupon code as well. All right, guys. It's going to be a wild one. Hold on to your horses. Again, if you're with me in verified investing, you see my live portfolio, my P&L, everything, and my position size real time. If you're on my Garros Top Squad, I thank you for that support as well. And I'll get you guys a video later. Take care.