Note: There will be no video today as I’m currently traveling. Thank you for your understanding.
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.
SPX and QQQ’s upside progression seems to be following the cyclical and structural playbook and likely helps these climb to 6790, 614, respectively, into next week before possibly finding resistance.
^SPX has now quickly made its way back to all-time highs today, and upside resistance lies at 6785-6800. For those who care about trend analysis, the area at $6700 now takes on special significance as it represents 10/7 lows, as well as approximating former late September 22 peaks, which fell within 2 points of this level.
Any decline in the days ahead that breaks 6700 would be thought of as being important and negative. At present, another 3-5 days look possible and likely for both ^SPX and QQQ -1.84% as Tech continues to demonstrate stellar leadership.
While Tech is the only sector today higher by more than 1% (Based on the 11 Equal-weighted ETFs that make up the S&P 500), it is encouraging to see both Industrials and Materials show some strength (both up more than +0.70%). Investors should pay close attention to next week, given some of the bifurcation that’s started happening in sectors other than Technology. (Yesterday’s Move in Discretionary fell to nearly the lowest level in two months.)
Overall, it’s still right to be bullish, but I do expect that ^SPX might find resistance by the end of the week/early next week near 6800.
S&P 500 Index
QQQ rally progressing on schedule, but could face resistance near 614
QQQ -1.84% looks to have upside up to $614, and this might happen into early next week ahead of a stallout. At present, today’s move is constructive for the NASDAQ 100 ETF, and daily DeMark tools show the possibility of another three days of gains until possible daily Exhaustion signals appear, which also might line up with Weekly signals next week. I’ll be watching this carefully, but at present, QQQ -1.84% and most of Technology remain difficult to avoid.
Nasdaq QQQ Invesco ETF – QQQ
Financials strength from the lows of its consolidation vs. the Equal-weighted S&P 500 looks important
Financials is my choice of sectors to favor for Q4 outside of Technology and Utilities, while Consumer Discretionary has lost a bit of appeal given its recent short-term technical damage.
Regional banks have helped the Financials sector to gain appeal lately, given the comeback in Small-caps, and I feel that KRE -0.66% could begin a lengthier period of outperformance vs. KBE -0.79% in the months to come. The chart below simply highlights the relative relationship between the Equal-weighted Financials sector vs. the Equal-weighted ^SPX, which has made some definite stabilization since reaching the lows of its multi-month consolidation and has begun to turn higher.
Overall, Financials remains a technical Overweight and should be favored for outperformance between now and year-end.
RSPF/RSP
US Dollar index has now risen to two-month highs
This week’s biggest technical development doesn’t concern Equities, but rather the sudden strength of the US Dollar, which has risen to two-month highs and has exceeded a five-month downtrend. Some of this strength is due to USDJPY having pushed up on Takaichi’s surprise leadership victory for the LDP party in Japan.
However, given that the US Dollar and US Treasury yields have both been trending lower since the Spring as Equities, Cryptocurrencies, and precious metals have been strengthening, it’s important to note when there starts to be a change in this relationship.
While I do not expect technical strength to surpass August peaks at 100.257 in the DXY at this time, this week’s rally appears likely to extend a bit further, and today’s trend breakout is short-term constructive for the DXY. Thus, watching Emerging markets and commodities carefully makes sense given that the Dollar has begun to strengthen.
U.S. Dollar Index
Source: Trading View
Silver’s ratio to Gold looks to be nearing trendline resistance
At present, Silver has proven much stronger than Gold over the last six months, but looks to be nearing an area of real importance based on the longer-term trend, which measures SLV -0.16% vs. GLD -0.13% on a ratio basis.
While neither silver nor gold has shown evidence of rolling over yet in October, I suspect that Silver might face some headwinds sooner than Gold. Bottom line, SLV -0.16% likely faces resistance between $46.50-$48, which likely results in a stalling out in this parabolic rally in the Ishares Silver Trust (SLV -0.16% ). At present, SLV -0.16% may have another 1-2 weeks of outperformance over Gold before this starts to stall, relatively speaking.
SLV/GLD
