“With standard October expiration on Friday and a huge build-up of put open interest at the 400-430 strikes, the risk of a delta-hedge selloff increases if the SPDR S&P 500 ETF Trust (SPY – 437.86) breaks 430, equivalent to the SPX hitting 4,300 in the upcoming days. If the SPY remains above these put strikes, there will be supportive expiration and short covering related to that put open interest, which is a plus for bulls.”

          - Monday Morning Outlook, October 11, 2021

October expiration week got off to a dicey start, but as the saying goes: “Sometimes it isn’t how you start, it is how you finish.” After the removal of some uncertainty regarding the Federal Open Market Committee (FOMC) meeting minutes, mixed reports on inflation, strong retail sales data, and positive earnings reports from some of Wall Street’s biggest banks, the S&P 500 Index (SPX – 4,471.37) finished with a weekly win. 

In fact, the SPDR S&P 500 ETF Trust (SPY – 445.87) low was $431.54 mid-week, never breaking below the 430 strike, which could have induced further selling. Buyers stepped in after a benign producer price index (PPI) followed a worrisome consumer price index (CPI), and the unwinding of short positions associated with expiring out-of-the-money SPY put open interest likely drove stocks into Friday’s close.

“As the technical backdrop has become less orderly in terms of buy-the-dip, we are seeing evidence of pessimism growing, a condition that is necessary for a bottom. But in our experience using sentiment indicators, it is not only the absolute level of sentiment measure, but also the direction that the sentiment measure is heading. In other words, the most bullish conditions occur after a relative extreme in pessimism is achieved, and there is evidence that such pessimism has climaxed.”

          - Monday Morning Outlook, October 4, 2021

We are now seeing evidence of pessimism climaxing. The graph immediately below displays the 10-day, buy-to-open put/call volume ratio on SPX components. Note the small rollover from a climactic high, which have typically preceded bullish market conditions. 

Moreover, while the Nasdaq-100 Index (NDX – 15,146.92) component 10-day, buy-to-open put/call volume ratio has not yet rolled over, bulls might take some solace in the fact that, amid less technical deterioration than the SPX during the past decline, this ratio is around levels that have marked peaks multiple times in the past three years.

Weekly sentiment surveys are also indicating that pessimism may have climaxed, with the percentage of bullish advisors in the Investors Intelligence survey rising from 40% to 42%. Meanwhile, the American Association of Individual Investors (AAII) saw a bullish move from 26% two weeks ago, to 38% last week.

From a technical perspective, bulls should be encouraged by developments for the SPX and NDX. After multiple daily lows from mid-September into early-October at the round 4,300-century mark, the SPX has rallied above two potential resistance levels.

The first was from a trendline connecting lower highs since the early-September peak, with Thursday’s breakaway gap above this trendline at 4,392, cementing this accomplishment. This may have encouraged additional buyers, who pushed the SPX back above its 50-day moving average at 4,436, via a runaway gap at Friday’s open.   

A first level of support would be the SPX filling Friday’s gap, which coincidentally would be a retest of the 50-day moving average. Additional support would come from the trendline connecting lower highs since September, which begins the week at 4,380, and ends the week at 4,358, which is within five points of the close ahead of Thursday’s breakaway gap. 

The SPX comes into the week at a potential resistance area of 4,460, the level at which the break below the long-time bullish channel and 4,475 occurred one month ago. This is also double its March 2020 closing low. Just above these levels is another area of potential resistance at 4,500-4,507, with 4,500 being a round half-millennium mark, and 4,507 being the level that is 20% above last year’s close.

“…investors should proceed with more caution, since the SPX broke its buy-the-dip pattern that was visible for months. Plus, the Nasdaq-100 Index (NDX - 14,791.87) remains below the key 15,000 millennium level, which should have been supportive on a pullback. Now, there is risk of additional selling in the coming week to 14,370 and 14,000 or the lower rail of its 13-month bull channel...”

          - Monday Morning Outlook, October 4, 2021

As I mentioned earlier in this commentary, the NDX did not experience the same technical deterioration the SPX saw during early October pullback, because the NDX did not break below a long-term bullish channel in place since September of 2020. Nor did the benchmark break below its 120-day moving average, which has usually marked troughs during this period.  

Because of this, I find the pessimism among option buyers on NDX components to be bullish right now, especially with the NDX closing back above the 15,000 last week. The current sentiment backdrop conflicts with the bullish trend, which ultimately has bullish implications. 

In July, when the NDX was making its first push at 15,000, option buyers were at their most optimistic in years, as measured by the extremely low level of the 10-day, buy-to-open put/call volume ratio on NDX components. While it took a while to play out, the NDX came back to visit this level just a few months later, after a brief push through 15,000. Now, with the NDX at 15,000 again, this same ratio is near the highs of its three-year range, indicating there is more firepower to push the NDX through 15,000 for more than a short period.

Technology investors should stay the bullish course, with the index in a bullish uptrend. Do not disturb long positions, unless the NDX breaks below its channel, which comes into the week at 14,500, and ends the week at 14,570.

Much of the above discussion adds up to mounting evidence that a bottom is in for at least the next few months. Plus, the fact that the CBOE Volatility Index (VIX – 16.30) closed below levels of potential support adds to the bullish theory.

Todd Salamone is Schaeffer's Senior V.P. of Research

• The Week Ahead: Third-Quarter Earnings Season Gets Under Way
• Indicator of the Week: Low-Priced, High-Priced Stocks - What Yields Better Returns?

Beyond the seemingly omnipresent Bitcoin (BTC), crypto wallets support the purchase and sale of many different types cryptocurrencies. The alternative cryptocurrencies have features in common with Bitcoin, but altcoins are also unique in specific ways. 

Some altcoins, for example, use a distinct consensus algorithm to generate blocks or authenticate transactions. Others set themselves apart from Bitcoin by providing additional or new functions, for instance, low-price or smart contracts volatility.

As of October 2021, over 12,000 cryptocurrencies exist. Altcoins accounted for almost 60% of the overall cryptocurrency market in October 2021. Because they are based on Bitcoin, altcoin price changes tend to follow Bitcoin's trend. 

On the other hand, analysts predict that the maturity of cryptocurrency investing ecosystems and the creation of new marketplaces for these cryptocurrencies will reduce price fluctuations linked with Bitcoin's trading signals.

The History Of Altcoins

We can see that the first Altcoin originated only after two years, in 2009, when we look back at Bitcoin's birth. Then the rate of Altcoin debuting began to rise from 2013, 2014. It continued to grow until now. In 2017 over 600 new cryptocurrencies were introduced, making it impossible to examine and study them all.

Market capitalization (also known as the market cap or just "cap") is another crucial indicator of Altcoin value. This metric compares the unitary cost multiplied by the number of coins in circulation to the current market cap. Bitcoin is still well-thought to be the first cryptocurrency, followed by Ripple and Ethereum (ETH).

Altcoins, Simplified

The Altcoin is a portmanteau of the words "alternative" and "coin." It refers to all alternatives to Bitcoin. The fundamental architecture of Bitcoin and altcoins is comparable. As a result, they share source code and perform as peer-to-peer systems or as large computers capable of processing large quantities of transactions and data simultaneously. In other situations, altcoins attempt to become the next Bitcoin by providing a cheaper electronic commerce method.

After its debut in 2009, Bitcoin became the first widely used Proof of Work (PoW) app. PoW is the fundamental mechanism behind many other cryptocurrencies, allowing for verifiable, decentralized agreement.

Different Types of Altcoins

Altcoins are a type of cryptocurrency that use various algorithms and protocols to solve particular problems. Altcoin technologies range from simple to advanced, as well as several functionalities and consensus methods. A quick rundown of some of the more important ones is here:

An altcoin can also be classified into more than one type.

1. Mining-Based

Mining-based cryptocurrencies are formed using a process known as "mining." Most mining-based currencies rely on Proof-of-Work, which creates new money by solving complex problems. Zcash (ZEC), Monero (XMR), and Litecoin (LTC) are examples of mining-based currencies.

2. Stablecoins

Since the inception of Bitcoin, cryptocurrency trading and usage have been plagued with volatility. Stablecoins aim to reduce overall volatility by tethering their value to a basket of commodities, including precious metals, fiat currencies, or other cryptocurrencies. The basket serves as a backup if the currency fails or encounters difficulties. Price swings for stablecoins are limited to a specific range.

3. Security Tokens

Security tokens are digitally recorded assets that function similarly to equities traded on stock exchanges. Security tokens resemble regular stocks and, in many cases, provide equity or a dividend payout to investors. The prospect of price appreciation for these tokens is a crucial incentive for investors to invest in them. Security tokens are usually accessible through initial coin offerings (ICOs), known as token sales in the cryptocurrency community.

4. Meme Coins

Meme coins are designed to mimic other cryptocurrencies and are named because they depend on a joke or a ridiculous interpretation of well-known digital currencies. They generally rise quickly, often fueled by prominent retail investors and cryptocurrency influencers looking for quick profits.

5. Utility Tokens

Utility tokens are a type of cryptocurrency that exist within a network. They may be used to pay for services, pay network costs, or redeem rewards, among other things. Utility tokens, unlike security tokens, do not distribute dividends or give up ownership interest. Filecoin is an example of a utility token used to purchase storage space on a network.

What Does the Future Hold for Altcoins?

We'll then move on to the future of cryptocurrencies and altcoins, which has a history in the circumstances that created a federally controlled dollar in the 19th century. There were several varieties of local currencies in operation in the United States at that time. Each had its features and was secured by a different instrument. For instance, gold certificates backed by deposits of gold with the Treasury. The government-backed U.S. notes were used to finance the civil war.

Many smaller banks were issuing their currency, with some being backed by phoney reserves. That confusion of financial instruments and currencies is similar to the present state of altcoin markets. There are now hundreds of alternative coins for sale in the market, each claiming to be helpful.

It is quite improbable that the altcoin markets will consolidate into a single cryptocurrency in their current state. However, probably, the majority of more than 1,800 altcoins listed on crypto exchanges will not survive. The altcoin market will concentrate around a few cryptocurrencies with utility and usage cases, which will dominate the marketplaces.

Altcoins are an inexpensive and easy way for investors to broaden their horizons and diversify beyond Bitcoin. Cryptocurrency markets have produced returns that are many times greater than those made by Bitcoin. There are dangers to altcoin investment, not the least of which is a lack of regulation. Cryptocurrency markets will undoubtedly develop in maturity, leading to more expertise and capital in the sector, which will aid in the development of rules and reduced volatility.

Altcoins are an excellent way for cryptocurrency market investors who want to diversify their holdings to do so. While a few, such as Ethereum's ether, are well-known, the majority of nearly 9,000 altcoins currently exist primarily unknown. The rise of altcoins and the possibility of cryptocurrencies revolutionizing modern finance are two sides of the same coin. However, before investing in them, investors should do their homework. The dangers linked with Altcoin investing are comparable to those faced by Bitcoin investment.

Third-quarter earnings season really kicks off this week. Investors will be eyeing plenty of economic data in mid October, as fall seasonality continues. With earnings season in full swing, some of the notable names on tap will be American Airlines (AAL), American Express (AXP), Fifth Third (FITB), IBM (IBM), Johnson & Johnson (JNJ), Netflix (NFLX), Procter & Gamble (PG), Tesla (TSLA),  United Airlines (UAL), and Verizon (VZ). 

Today will start the week off with industrial production data and data from the National Association of Home Builders index (NAHB).

The following corporate earnings announcements are expected today, October 18:

Albertsons Companies Inc. (NYSE:ACI -- $28.56) engages in the operation of food and drug stores in the United States. Albertsons will report its Q3 earnings of 2021 before the bell today.

Koninklijke Philips N.V. (NYSE:PHG -- $44.57) operates as a health technology company in North America and internationally. Philips will report its Q3 earnings of 2021 before the bell today.

State Street Corp. (NYSE:STT -- $92.73) provides a range of financial products and services to institutional investors worldwide. State Street will report its Q3 earnings of 2021 before the bell today.

Equity Lifestyle Properties Inc. (NYSE:ELS -- $83.57) operates as a self-administered, self-managed real estate investment trust with headquarters in Chicago. Equity Lifestyle Properties will report its Q3 earnings of 2021 after the market closes today.

F.N.B. Corp. (NYSE:FNB -- $12.00) provides a range of financial services primarily to consumers, corporations, governments, and small- to medium-sized businesses. F.N.B. will report its Q3 earnings of 2021 after the market closes today.

Hexcel Corp. (NYSE:HXL -- $61.32) develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets. Hexcel will report its Q3 earnings of 2021 after the market closes today.

Steel Dynamics Inc. (NASDAQ:STLD -- $61.88) operates as a steel producer and metal recycler in the United States. Steel Dynamics will report its Q3 earnings of 2021 after the market closes today.

Zions Bancorp., N.A. (NASDAQ:ZION -- $62.14) provides various banking and related services primarily in the states of Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. Zions will report its Q3 earnings of 2021 after the market closes today.

Looking ahead to tomorrow, Tuesday will bring building permits and housing starts. 

All economic dates listed here are tentative and subject to change.

Stocks continued to behave in volatile fashion throughout the second week of October, keeping with fall seasonality trends. The Dow fell 250 points on Monday, despite adding nearly as many points at session highs, while surging oil prices stoked inflation fears. The blue-chip benchmark went on to register another triple-digit loss on Tuesday, after news that the International Monetary Fund (IMF) slashed its global growth forecast. A sharp drop in job openings for August, in addition to supply chain issues, led the Dow, the S&P 500, and the Nasdaq to log their third consecutive day in the red.

The S&P 500 and tech-heavy Nasdaq snapped their losing streaks on Wednesday, as investors digested news that the Federal Reserve could begin gradually tapering its monthly asset-purchase program as soon as mid-November. Meanwhile, a higher-than-expected jump in the consumer price index (CPI) still weighed on sentiment.

Stocks charged higher Thursday, however. The Dow scored its best single-session gain since July 20, while the S&P 500 and Nasdaq logged their best wins since March 5 and May 20, respectively. This surge came on the heels of well-received earnings reports from major bank names, as well as the lowest weekly jobless claims reading since the pandemic began. At last check, the three major benchmarks were pacing for weekly wins, thanks to another round of upbeat earnings results, encouraging retail sales data, and Bitcoin's (BTC) surge.

Blue-Chip Stocks Gear up for Earnings

A handful of blue-chip stocks were gearing up for earnings this week. Goldman Sachs (GS) was among them. The finance giant lowered its 2022 forecast for the U.S. economy to an expansion of 4%, down from 4.4%, before stepping into the confessional earlier today.  Another financial concern in the spotlight was JPMorgan Chase (JPM), which slipped despite posting blowout quarterly earnings.

Meanwhile, Walgreens Boots Alliance (WBA) prepared for its Thursday earnings report by announcing two major leadership appointments. Johnson & Johnson (JNJ) is looking ahead to next week's quarterly results, as a key decision regarding its Covid-19 vaccine booster shots hung in the balance. Outside of this slew of earnings reports, Caterpillar (CAT) popped after drawing some bullish analyst attention.

Household Names Making Headlines

There was no shortage of household names in the limelight. Starbucks (SBUX) kicked off the week with an upgrade, after one analyst turned bullish on the coffee chain's U.S. momentum. E-commerce giant Amazon.com (AMZN), on the other hand, pulled back to a historically bullish trendline that could push the equity higher. Speaking of pullbacks, NIKE (NKE) attracted fresh analyst coverage on its attractive entry point, as well as a "powerful brand legacy."

Elsewhere, Qualcomm (QCOM) bounced off annual lows after announcing a new $10 billion stock repurchase program. Bank of America (BAC) was also higher, following a third-quarter earnings and revenue beat. Finally, Netfix (NFLX) cooled down from a record high ahead of its quarterly earnings report, which is due out before the open on Tuesday, Oct.19. 

Earnings Season Kicks Into High Gear Next Week

The shares of Moderna Inc (NASDAQ:MRNA) are up 1.7% at $337.19 this morning, adding to yesterday's 3.2% pop. On Thursday, a U.S. Food and Drug Administration (FDA) panel recommended approval of the company's Covid-19 vaccine booster dose for those over 65 or at high risk. Additionally, Piper Sandler upgraded MRNA to "overweight" from "neutral," noting that the stock currently sports an attractive entry point. 

MRNA looks ready to string on its fifth-daily win, marking its longest win streak since early September. However, the 80-day moving average, which the stock gapped below in early October, still looms as potential resistance. The $300 level stepped in as a floor for this sharp pullback, though, and MRNA sports an impressive 223.5% lead for the year. 

The brokerage bunch has remained cautious on Moderna stock. Coming into today, only four of the 14 covering the stock consider it a "strong buy," compared to eight "hold" ratings, and two "sell" or worse ratings. The 12-month consensus price target of $340.17, meanwhile, is just a slim 1.2% premium to current levels. 

This bearishness is reflected in MRNA's options pits, where the stock sports a 10-day put/call volume ratio that stands in the 97th percentile of its annual range at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In other words, puts are being picked up at a much quicker-than-usual clip. 

Speculating on MRNA's next move with options might be a prudent play, too, especially considering the equity's Schaeffer's Volatility Index (SVI) of 60% stands higher than only 9% of readings from the past 12 months. This means options traders have been pricing in relatively low volatility expectations for Moderna stock at the moment. Adding to this, MRNA's Schaffer's Volatility Scorecard (SVS) ranks at 98 out of a possible 100, implying that the equity tends to exceed said volatility expectations. 

The shares of Barrick Gold Corp (NYSE:GOLD) are down 2.5% to trade at $19.11 this morning, as buillion prices drop on a rebound in U.S. bond yields, despite a cooling U.S. dollar. The miner also received a price-target cut from Bernstein earlier to $26.50 from $27.50. 

The brokerage bunch is mostly optimistic towards Barrick Gold stock. Of the the nine analysts in question, six call the equity a "buy" or better, while the remaining three say "hold." Additionally, the 12-month consensus target price of $28.05 is a massive 43.3% premium to last night's close, indicating the security could be overdue for more price-target cuts and/or downgrades.

The equity has had a rough year thus far, trending lower on the charts, despite a rally to the $25 level in mid-May. More recently, the security seems to have bounced off a floor at the $17.70 area, though recent pressure at the 80-day moving average is keeping a lid on these gains. Year-over-year, GOLD has shed roughly 30%.

For those wanting to speculate on Barrick Gold stock's next move, options may be the way to go. The equity's Schaeffer's Volatility Index (SVI) of 31% sits higher than just 5% of readings from the past year, suggesting options players are pricing in low volatility expectations right now.