QQQ has pulled back down to initial support

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:

  1. SPX is approaching 50% retracement area of its prior runup, while QQQ has hit trendline support.
  2. Elliott-wave theory shows this entire week’s correction to be a corrective pattern, not something that would lead to much further weakness.
  3. DeMark weekly exhaustion is not yet complete for SPX, so a pushback to new highs is required.
  4. NVDA’s chart is also quite bullish, and weekly exhaustion is also premature.
  5. AAPL chart improved this week after the decline into early November could have morphed into a much more negative pattern.
  6. The area near former October 2024 peaks is thought to be important structurally on a decline. 
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