Near-term and intermediate-term technical trends remain bullish for US Equities, but a few sectors have started to weaken lately, making it right to be more vigilant. Moreover, both Treasury yields and the US Dollar made 2025 lows in September and have gradually been higher, while Equities have also pushed higher. Furthermore, DeMark-related exhaustion signals are now close to materializing on a weekly basis across Equity index ETFs like QQQ, SPY, along with BTCUSD and Gold. Thus, heading into mid-month, it looks necessary to pay close attention to uptrends on SPX and QQQ, which at this time, remain intact. I expect a push back to new highs in both over the next 4-6 trading days, but expect that mid-month might bring about a stalling out and trend reversal, which might affect Equities, Precious Metals, and Cryptocurrencies. This should occur from higher levels and monitoring trends in all three remains important, given that all have moved up in unison in recent months.
Overall, I do not make much of Tuesday’s decline as weekly lows along with the ongoing uptrend from both late September and the intermediate-term uptrend from April were not violated.
Wave structure seems to suggest a possible “final” push higher to new all-time highs over the next week, which then might complete this most recent uptrend from late September and result in consolidation in the back end of October.
For now, I still view trends as having a good likelihood of pushing higher this week, but expect that ^SPX should find resistance near 6790 while QQQ could face resistance near 614, which could have some importance.
As seen below, while ^SPX did undercut Monday’s lows, it remains well above weekly lows, along with the most recent uptrend from early September. Several upside projections come together near 6780-6795 that could have some importance later this week. At present, a further rally back to new highs followed by a stalling out into next week is my current technical thesis.
S&P 500 Index
The key near-term technical risks involve the following (which aren’t all completely in place just yet)
- Overbought conditions– This is notoriously a poor reason to avoid owning US Equities, as many investors realize that overbought conditions can likely persist and don’t have to specifically represent a reason for concern. Yet when weekly RSI rises over 70, it’s important to pay attention and not become overly complacent.
- Weekly DeMark indicators for both QQQ and SPY might materialize within a week and have already begun to start to form on a few indices. At present, this isn’t complete per my own standards, and still looks premature.
- Cycles start to turn lower in the back half of October. Whether or not this materializes, it’s important to note that the cycle composite does show a short-term negative bias into mid-November. Thus, if there’s going to be any weakness in this trend, I highly anticipate that it should happen starting within 1-2 weeks and lasting into early to mid-November before a strong year-end rally.
- Breadth hasn’t been as strong as it was seen in late Spring into July. While the short-term breadth gauges have risen over the last week, in general, they’ve dropped off when looking at the Percentage of SPX or Russell 3000 names above their 20-day moving average.
- One particular gauge of sentiment, which I utilize, the Equity Put/call ratio, remains a bit too low for comfort after having pulled back to 0.45 in the last two weeks. While the broader gauges I track remain Neutral at best, this particular reading remains a bit too low for my liking. (Signifying ongoing heavier call buying than Put buying)
Overall, the biggest positives revolve around the ongoing bullish uptrend, having shown little to no evidence of any deterioration this past few months. Furthermore, Technology’s comeback has been something to marvel at. Given that Tech represents 30% of ^SPX, this remains a big positive for US Equities.
Until mid-September lows of 6569.22 are broken (Sept 22 intra-day lows) it makes it difficult to have too much concern about SPX’s near-term technical direction being anything but bullish.
^SPX hourly Elliott projections call for a push up to near 6800 and don’t suggest Tuesday’s decline was all that serious
This hourly chart was shown mid-day on Tuesday and shows that, in all likelihood, Tuesday’s decline will likely stabilize and turn back to new highs.
However, this would represent the final push higher, potentially from early September, and might find strong resistance into next week on any gains back to highs.
This trajectory would be wrong if ^SPX were to undercut 6677, which is the first important structural area on the downside. Under this level lies late September lows at 6569.22. Both of those are considered important technical supports that will need to be monitored in the days/weeks ahead.
S&P 500 Index
Consumer Discretionary could face additional weakness following its breakdown to nearly the lowest levels since mid-August
One sector which is important to monitor is Consumer Discretionary, which, as shown below on an Equal-weighted basis per the RCD (Invesco Equal-weighted Consumer Discretionary ETF), fell under late September highs, which is a technical negative for this sector in the short run.
Additional weakness looks possible over the next week before a bounce, but increasingly, it looks like “Discretionary” could have peaked in early September and is beginning a Fall correction.
Stocks like WYNN, CCL, CMG, F, DHI, BWA, KMX were all down more than 4% over the past 5 trading sessions.
While I remain technically Overweight “Discretionary” a failure to rally back in the weeks to come would warrant a possible downgrade to Neutral, technically.
Invesco S&P 500 Equal Weight Consumer Discretionary ETF
Consumer Discretionary has not broken its uptrend vs. Equal-weighted SPX since last year, but the extent of recent selling pressure is worth noting
In the short run, it’s interesting to observe that “Discretionary” has broken down vs. the Equal-weighted ^SPX back under prior peaks from earlier in 2025.
This was thought to be potentially difficult to achieve following what appeared to be a multi-year breakout in relative terms above a long-term uptrend.
The extent of the weakness in the last month has not violated the uptrend vs. RSP since the 2024 lows, and looks to be quickly nearing this level.
However, the severity of its recent underperformance is worth monitoring in the weeks to come in the event that this sector cannot stabilize and rally.
RSPD / RSP
