Emerging markets could bounce into End-of-Yr. as DXY decline continues Array ( [cookie] => 7260e9-61ff0e-d1172d-fafa4b-8a0617 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 19840 [user_id] => [reason] => [method] => ) 1 and can accesss
Equity trends from August remain bullish, and SPX has neared the upper edge of its four-month channel resistance while the NASDAQ 100 index has just pushed back to new all-time highs. Treasury yields and the US Dollar have both begun to wobble lately as December has gotten underway, but their sudden trend reversals have had scant negative effects on the current appetite for US Equities. Thus far, no evidence of consolidation has played out which lines up with cycle projections and lackluster breadth since September. Overall, while Sentiment, cycles, and DeMark signals, along with lackluster Technology participation, made SPX seem like a risky bet following its 15% rally in 15 weeks from August lows, there simply hasn’t been any evidence of price weakness. As the saying goes, it remains difficult to bet against uptrends in December. While I expect some consolidation in SPX before the price gets above 6100, it could be limited to 5950 given the recent breakout in stocks like AAPL, which are important to SPX and QQQ. Thus, for those looking, the timetable for a possible near-term consolidation could happen from 12/5 into December expiration before an end-of-year rally.
I’m not thrilled with the short-term risk/reward with SPX at 6100 ahead of Friday’s Jobs report and the economic data over the next couple of weeks, with CPI on deck for 12/11 and PMI to follow ahead of the December FOMC rate decision on 12/18. While there’s been no evidence of price weakness, the US Equity market has shown negative market breadth for three of the last four days of this trading week.
Today’s trading brought about mild losses for SPX and QQQ, though no important breaks of support. Six out of 11 sectors fell in trading, with 1% losses out of Technology, Healthcare, and Materials. Overall, given the positioning data entering a time of potentially market-moving economic reports during a time of cross-asset volatility, we very well could be entering the so-called “Zone of Hesitation” that Tom Lee mentioned.


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