Short-term Market peak likely by end of week; Breadth waning as wave pattern nears completion

Technical Strategy Video:

Short-term Market peak likely by end of week; Breadth waning as wave pattern nears completion

Key Takeaways

  • SPX closing in on all-time highs, though breadth was negative and wave structure nearing temporary conclusion from early October; Expecting short-term peak by Friday
  • Technology growing stretched, and DeMark exhaustion shows possible confluence within 2-3 trading days
  • Bitcoin decline looks buyable; Should push back to minor new highs into end of November

The rally continues to press higher in the short run, and SPX finished within a point of All-time highs; Yet, breadth has begun to wane on this push up, and we’ve seen some minor evidence of Defensive groups showing some strength this week. Elliott-wave projections from early October suggest a move back above 4718.50 from 11/5 should mark a possible short-term peak in the 45 day rally. This in turn likely results in some consolidation which could retrace 38-50% of the move from October before markets can push higher into December. Near-term, however, this is premature for now, and a push above 4718 looks likely with most likely targets near 4750-75.

Short-term Market peak likely by end of week; Breadth waning as wave pattern nears completion
Source: TradingView

DeMark exhaustion is starting to near completion on daily charts, which could be in place by Thursday/Friday of this week

Daily RYT, the Invesco Equal-weighted Technology ETF charts look to be 2-3 days away from achieving possible confluence to this rally, which would let TD Sequential and TD Combo indicators form “13 Countdown” patterns not dissimilar from what happened in early September and also July of this year. In both instances, pullbacks proved mild, and technically I suspect a push up to SPX 4800 won’t be able to happen until recent gains are consolidated into late November. I expect the total amount of the decline, for now, to amount to 3-5%. Technology ETF charts could possibly line up with both SPX and QQQ charts, and this will be discussed in the days ahead.

Importantly, weekly counter-trend exhaustion looks to be 2-3 weeks away from completion. Thus after a minor downdraft, it’s possible to turn higher into December, and move above 4765. However, this might also encounter weekly exhaustion which might give way to a pullback sometime in mid-December and/or January. At present, these signals are not complete and I’ll await signs of confirmation before making too much of the weekly signals.

SPY daily chart below.

Short-term Market peak likely by end of week; Breadth waning as wave pattern nears completion
Source: Symbolik

Cryptocurrency decline looks buyable for push up into late November/early December

Last night’s break of 62294 has resulted in short-term weakness which should be reaching support at either 59862 (held on hourly close thus far) or 57,371 before pushing back to new highs. Importantly, the extent of the weakness from 11/10 highs makes the rally from late October very much “corrective” from an Elliott-wave standpoint, as just a three-wave (ABC) advance. Overall, this remains consolidation from 10/20, not the start of a big decline, technically. Thus, this minor pullback creates an attractive risk/reward to buy dips for a push higher in the weeks to come. For confirmation, BTC needs to rally back up over 66387, the most recent swing high from Monday 11/15. Yet that will give conviction that a rally back to 72k or 77.7k is underway.

The important takeaway here is that our weakness very likely isn’t the start of a selloff, but merely still consolidation and is buyable. However, on the rally back to new highs, this would in fact mark the final push up of the entire rally from July. Thus, making new monthly highs in this case into late November/early December will actually be something to sell into from a trading perspective, not something which likely reaches 100k or greater, at least this time around, technically. Downside targets should materialize this week, if not today

Short-term Market peak likely by end of week; Breadth waning as wave pattern nears completion
Source: TradingView
Disclosures (show)

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