Small-caps start to kick into gear again into Election Array ( [cookie] => c85018-9dae20-eb73e5-6121b5-22543d [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] => 563296 [reason] => [method] => ) 1
Equity trends remain bullish from early August but have shown mild consolidation over the last two weeks which has resulted in a 2% decline in SPX. While various sectors like Technology, REITS, Industrials, Energy, & Utilities have all drifted lower since mid-October, there hasn’t been sufficient damage towards thinking a big selloff is underway. (Evidence of a bounce beginning started to resurface on Election day and would gain credibility if/when SPX gets back above 5811.) Both US Dollar and US Treasury yields are all getting close to levels where they arguably should stall out and turn lower this month. Overall, I suspect that rallies in both US Equities and Treasuries occur after the US Election as uncertainty gives way to clarity, at least with regard to congressional races. SPX should find initial technical resistance near 5900-5935. Meanwhile, QQQ should find resistance at 503-505.
As discussed above, evidence of the gap at SPX-5811 being filled and exceeded would then point towards a move back to new all-time highs in SPX, to near 5950 in all likelihood.
Tuesday’s About-face looked to be a step in the right direction for market bulls. However, more proof, in the way of a daily close above 5811 to fill the gap from late October, would serve to add conviction to this rally.
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