TradeZero Blog

Technical analysis is one of the two primary methods to understand stock market movements. While fundamental analysis focuses on a company’s financial health for long-term growth, technical analysis zeroes in on price action.

The stock market showed strong upward momentum during the week ending October 18, 2024, bolstered by positive earnings reports and solid economic data. The S&P 500 rose approximately 0.8%, maintaining its upward trend, while the Dow Jones Industrial Average and NASDAQ also made gains.

Unlike traditional investing, which, while still risky, allows you to sit and observe whether your thesis is correct, trading requires rapid responses, and opportunities arise quickly — but also fade quickly.

The stock market saw a positive rally despite mixed economic signals. The S&P 500 gained 1.4%, driven by strong earnings reports from big banks and sectors like technology and transportation. This occurred despite mid-week inflation data, which raised questions about future Federal Reserve rate cuts. In response to inflation concerns, U.S. Treasury yields rose, reflecting investor caution about the economic outlook.

Markets were resilient as September and the third quarter closed, registering gains despite economic and political uncertainties. The S&P 500 and Nasdaq closed Monday, September’s last trading day, up 0.4%, while the Dow Jones gained nearly 0.1%. The S&P 500 notched its 42nd all-time high for the year, making it the best September since 1997 and the best start to an election year ever.

The Fibonacci sequence might seem like just a set of numbers at first, but its importance in trading lies in its ability to help identify potential levels of support and resistance. These are key levels where a stock or asset might pause or reverse during its price movement. Traders use Fibonacci retracement levels to gauge how much a price has pulled back from a previous trend, and they look for price action to either bounce or continue at these levels.

September is historically the worst month for the U.S. stock market, but stocks may be poised for September’s first gain since 2019. U.S. indices were positive this week after celebrating the Fed's supersized 50 bps interest rate cut – its first in four years.

The Fed kept rates close to zero for nearly a decade following the 2008-09 global financial crisis, then took them above 2% before heading back toward zero during the Covid-19 pandemic. When a combination of stimulus cash, rebounding consumer demand, and supply chain kinks sent inflation to double-digit percentages, the Fed quickly raised rates to their recent peak to cool demand.

U.S. stocks closed out their best week of the year with more gains on Friday and climbed to the cusp of their records. The S&P 500 rose 0.5% for a fifth straight gain and is just 0.7% below its high set in July.