Trick Or Treat from the FOMC? Equity rally will accelerate short-term if early Oct. lows are recouped

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SPX and QQQ very well could have bottomed last Friday on a perfect 3-month anniversary to the peaks from late July.  However, as discussed in recent days, indices require a daily close back over early October lows to have proof that a larger bounce has begun.  Interest rates look to pull back into late next week, and this likely can coincide with our much-anticipated Equity bounce.  Overall, given widespread technical damage in many sectors it’s going to be important to see more evidence of a rolling over in both US Dollar and Treasury yields to have confidence of a sustainable rebound.

As October came to a close, SPX has the dubious honor of facing its first three-month losing streak since 2020 and only the 2nd time in 33 years that August, September and October have all turned in consecutive negative returns.  (2016 also featured this three-month decline.)

This doesn’t imply that the “bear market is back," in my view. However, given the volatility expectations for mid-November, it means that “much work needs to be done” to repair all the technical damage of the prior month.

It’s thought that a bottom is happening this week which should lead to US Equity rally into late next week...
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