The Road for US Equities grows trickier into mid-November Array ( [cookie] => 2a48e8-f3cdc2-6703b3-879602-deeeba [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 1 [subscriber] => 0 [role] => fsi_macro [visitor_id] => 567896 [reason] => [method] => ) 1
US Equity trends have reached areas of resistance which likely make the road between now and mid-November a bit trickier, despite the ongoing bullish uptrend. I suspect that a near-term correction will happen starting between now and end of October that results in 5-7% correction in Stock indices into mid-November before the next leg higher gets underway. This should arguably represent a short-term correction only, not the start of a larger decline. Moreover, weakness into November should represent an attractive risk/reward opportunity for dip buying for US Stocks for a technical December rally into Year-end. At present, US stock indices are a bit “Over their Skiis”, and should require consolidation before this rally can continue. Both US Dollar and US Treasury yields could retreat as Stock indices pull back, and risk assets generally could face a consolidation phase which would prove constructive as a way to help sentiment and momentum reset a bit ahead of a rally into year-end. Overall, the correction that I suspected might start by 10/17 could very well be getting underway a few days early, and I suspect Equity indices are lower into mid-November before rebounding in December. Risk/reward seems poor in the short run, and SPX seems unlikely to exceed 6000 right away. Meanwhile, QQQ should find resistance at 503-505.
I believe that Stock indices could be at/near a peak that happens between now and end of month, which results in a 5-7% decline between now and mid-November. This might take the form of an initial peak this week, followed by a selloff next week. Thereafter, a bounce attempt happens into Oct 31-November 1 which could mark a Double-top for stock indices. (I say this as strong evidence pointed to this week from a time perspective, and then an additional period of inflection near the end of the month.)
Overall, the preponderance of the evidence still shows the broader US Stock market to be in good shape, with not many intermediate-term warnings. However, over the next 1-2 weeks, there looks to be an increasing likelihood of a short-term market peak which might materialize in October, leading to minor weakness into early to mid-November.
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