Minor pullback possible as part of normal seasonal weakness

Near-term and intermediate-term technical trends remain bullish for US Equities, but Tuesday’s setback might have kicked off the start of a minor pullback in Stock indices, lining up with a traditional “Sell Rosh Hashanah, Buy Yom Kippur” theme, which could allow for continued weakness into next week before US Equity markets stabilize and begin to turn higher. As detailed in recent days, there’s been some massive divergence between Technology and the broader market of late.  Furthermore, short-term overbought conditions are present along with some DeMark-related exhaustion signals, which might result in some short-term consolidation for US indices. While neither SPX nor QQQ has technically violated short-term support, which would suggest this move has definitely gotten underway, I feel that any daily close under the 9-day simple moving average (m.a.) (SPX-6639) should result in a test and possible break off 6600 and might lead to a test of 9/17 lows at 6551.  Both DXY and Treasury yields should be in the process of rolling over following minor bounces this past week.  Finally, the rally in precious and industrial metals has continued, and it still seems early to avoid this area, despite how overbought momentum has become lately.      

Tuesday’s decline happened to occur right into a window where seasonal weakness typically does occur in September, and prices largely closed near the lows of the session, within three points of where Monday’s opening price occurred.

Despite Micron Technology’s ($MU) better-than-anticipated earnings report, I’m still of the opinion that markets are in a window where selling pressure might occur into next week.

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