Keep an Eye on Consumer Confidence This Week
The Conference Board is set to release the Consumer Confidence Index for October on Tuesday. The index has been surging higher in recent months and the September reading was 138.4. That is the highest reading since September 2000.
The Consumer Confidence Index can potentially be used as a contrarian indicator for the overall market. Historically, the highest readings have come at market tops and the lowest readings have come at market bottoms.
High readings themselves haven’t necessarily been a signal of an impending bear market, however. From 1997-2000, the index was above the 125 level and the market continued to move higher. However, when the index fell by more than 10% from its peak is when things started getting bad.
With the recent peak reading of 138.4, the index would need to drop down to 124.6 in order to represent a 10% decline. The index may not drop that far in one month, but with the tremendous selloff we have seen in stocks recently, it could happen.
Obviously, you can’t trade the Consumer Confidence Index directly, but investors may want to consider taking defensive actions to protect their portfolios, in my view. One way to do that would be to buy long-term put options on an index ETF like the SPDR S&P 500 ETF (NYSE: SPY), or an investor could buy an inverse index ETF like the ProShares Short S&P 500 ETF (NYSE: SH). To note, these are not my recommendations and these tickers should not constitute investment advice.
Either of these actions could potentially help hedge a portfolio against an overall market correction. The amount allocated to a hedge should be determined by the construction of the portfolio. The greater the allocation to equities, the bigger the hedge will need to be in order to be effective.
Investors should also consider the makeup of their equity portfolio in order to choose the index to hedge. If the portfolio is heavily weighted with tech and healthcare stocks, the Invesco QQQ Trust (Nasdaq: QQQ) would potentially be a better ETF to buy puts on versus the Spyders. Or the ProShares Short QQQ (NYSE: PSQ) could potentially be a better inverse ETF to buy, in my view.
The market has been shaky for the past month and hopefully investors have been able to navigate the volatility in their portfolio, or to remain patient if you're long-term oriented. The Consumer Confidence Index is just one indicator that can be used to judge the sentiment toward the market and can help investors chart a course of actions to take.
SPY sees its 50-day moving average cross bullishly above its 200-day moving average
The 50-day moving average for SPY moved above the 200-day moving average on June 27, 2025. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for SPY just turned positive on June 26, 2025. Looking at past instances where SPY's MACD turned positive, the stock continued to rise in of 52 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SPY advanced for three days, in of 365 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 432 cases where SPY Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for SPY moved out of overbought territory on July 11, 2025. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 45 similar instances where the indicator moved out of overbought territory. In of the 45 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 11 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SPY declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
SPY broke above its upper Bollinger Band on June 26, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
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