Equity trends remain bullish but have begun to show some minor downside volatility, which was thought possible given the recent deterioration in market breadth, bearish cycles, and evidence of speculation that had cropped up in recent weeks. Emerging market Equities and currencies have shown evidence of volatility in recent weeks, while even domestic Equity indices have begun to roll over in many parts of Europe. Thus, US Equities are somewhat “late to the party” because of the volatility that has gripped many asset classes across the Treasury, FX, and commodity landscape. Both US Dollar and US Treasury yields look to be near resistance, which likely results in a trend reversal into December, while Equities likely could show some upside and downside volatility ahead of a bottoming out in December. Overall, I do suspect that downside volatility proves minor, but the road over the next few weeks looks more volatile than normal ahead of a seasonal rally into year-end.
My comments about Equities finding a bottom in Thursday’s report proved a bit premature given Friday’s selling pressure, though my analysis still shows the odds are more favorable to a rally back to highs before any larger consolidation gets underway. My statement above is predicated on the following reasons:
- SPX is approaching 50% retracement area of its prior runup, while QQQ has hit trendline support.
- Elliott-wave theory shows this entire week’s correction to be a corrective pattern, not something that would lead to much further weakness.
- DeMark weekly exhaustion is not yet complete for SPX, so a pushback to new highs is required.
- NVDA’s chart is also quite bullish, and weekly exhaustion is also premature.
- AAPL chart improved this week after the decline into early November could have morphed into a much more negative pattern.
- The area near former October 2024 peaks is thought to be important structurally on a decline.
Overall, while I’ve been discussing the likelihood of late November volatility into December, it’s hard to take this week’s price pattern and structure as being something that should lead to a 5% decline. SPX is now nearing the 50% retracement level of the entire prior rally from late October and also nearing the area near the opening gap post-Election and the highs of the Ichimoku cloud, so the area from 5850-61 looks important in my work as to an area that should provide support.
S&P 500 Index
SPX pt 2- While DeMark’s TD Sequential and TD Combo indicators are confirming “13 Countdown” signals today on daily charts with any close today under 5995.54 (which seems quite likely), they’re quite premature in confirming Weekly signals, which is what I personally (not DeMark, but myself) use towards thinking a larger selloff could be approaching.
While the gap down and early selling pressure was not expected today, it doesn’t bring about too much damage to the larger chart and the duration of the decline would equal the advance at 8 days as of Monday, while nearing a 50% price retracement. The combination of these, in my view, should be important towards producing a low and rally into Thanksgiving holiday. Note, the turn back higher in Technology very well could happen aligning with NVDA earnings as a catalyst next week. For now, Weekly MACD is positive, and this week’s selling has done precious little damage to the chart as compared to last week’s gains.
QQQ is down at meaningful trendline support
As seen below, QQQ has not broken down below its trendline support, and it lies right near the pivot area of its election breakout.
This area also happens to be filling the gap of last week’s rally and is thought to be strong initial support.
Overall, the area at 494-5 looks important initially as an area where QQQ can hold. However, it will be important for QQQ to get back over the area near today’s gap resistance, which lies near 507.77, to have some confidence in a pushback to new highs.
Nasdaq QQQ Invesco ETF
TSLA looks attractive from a risk/reward perspective following this week’s weakness
TSLA 2.37% also setting up as an attractive risk/reward after just fractional consolidation. Many might view this as a big selloff this week, but in the bigger scheme of things, following its 11/4-11/11 rally of about 119 points, this minor 3-day consolidation has barely given up 38.2% of the prior advance just from early November.
I expect a bottoming in TSLA next week and rally to 369 – 383 into late November/early December. If this were to happen, then a larger period of consolidation might be likely. However, the stock remains highly attractive technically, even if it doesn’t bottom today and sells off further to $300.
Overall, the risk reward arguably has gotten much better in TSLA given short-term weakness as part of an accelerating momentum situation.
Tesla, Inc.
Copper has pulled back to near-term Make-or-break levels
Copper has largely proven to be disappointing following a promising start to the year and sharp rally into this past May.
Its fortunes seem to have directly correlated with the rise and fall of China which peaked out nearly the exact same time in May before bottoming in August and beginning its rise into October.
Since that time Copper has pulled back in a three-wave manner that also looks to have been replicated by China’s Large-cap (FXI -0.28% ) ETF.
At present levels, Copper seems to be near make-or-break levels and cannot afford to break August lows near $3.92 without thinking a much larger decline might be possible into 2025.
At present, prices are holding the uptrend from last Fall, and rebounds should largely depend on a sharp reversal back lower in the US Dollar. This might indeed happen in December, but for now, Copper should just be watched carefully.
Any bounce that manages to recoup $4.29 would constitute a stronger rally underway, which could carry back to test early year 2024 peaks.
