A key policy change on Monday sent the S&P 500 (SPX) back to 3,612, a closing loss of 0.8%, states Jon Markman, editor of Strategic Advantage.

The Biden administration is stepping up its cold war with China by placing new trade restrictions on American semi-conductor firms. Domestic companies now must apply for a license at the Commerce Department to sell certain semi-conductor products in China.

The policy change adds more red tape into the gummed up global supply chain. Understandably, investors hate it. Weakness for tech on Monday left the benchmark S&P 500 below the key 3,640 level. There is some support at 3,584, however the true underpinning is way back at 3,398, the breakout from February 2020.

Bulls’ best hope is short covering ahead of Wednesday’s release of the minutes from the September Federal Open Market Committee meeting. Overhead resistance is 3,640, then 3,762, the declining 20-day moving average.

Strategic Trade

The ProShares Ultra Russell 2000 ETF (UWM) was stopped on Monday at $29.50 for a 4.8% loss. It has been a rough patch during this period of extreme volatility. All the markets are extremely oversold and due to bounce, perhaps sharply. Stand aside until there is more clarity, though.

October Surprise

In other proprietary stock action, I have mentioned for years that according to my research, Oct. 10 has historically been the best single day to buy stocks for a one-year hold. However, Bespoke Investment Group says the best single day is Oct. 13. You might consider setting a -10% stop on all or half the position just in case it doesn’t work out this super-volatile year that has favored no sectors, no sizes, and no themes.

Learn more about Jon Markman here...