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Near-term and intermediate-term technical trends remain bullish for US Equities, but a few sectors have started to weaken lately over the past week, 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.
Thursday’s minor weakness failed to result in any meaningful change to existing uptrends in US Equity indices, and technically should constitute a buying opportunity over the next week as the major indices likely stabilize and begin to turn back higher.
As discussed yesterday, ^SPX and QQQ 0.88% ’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.
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 0.88% as Tech continues to demonstrate stellar leadership.
As seen below, ^SPX failed to make any trend damage, and my expectation is for a rally back into next week.
Stocks like NVDA -0.84% , META 0.97% , AMZN 1.73% remain bullish and look likely to turn higher in the days ahead. AAPL 1.82% stalled out briefly near prior all-time highs, but remains positive technically, and a daily close over $259.24 would help to jump-start this important index constituent.
Overall, I don’t see an immediate break of 6700, which should contain weakness. However, I feel like rallies likely could find strong resistance near ^SPX-6800 into next week. Much of this concern is directly related to the divergence in the sector performance lately. Sectors like Consumer Discretionary and Communication Services look to be trying to peak out, while Energy also looks close following its recent bounce.
S&P 500 Index
EEM looks to be slowly stalling out; a Possible reversal could be forthcoming
EEM’s weekly momentum (iShares MSCI Emerging Market ETF) has reached overbought levels that haven’t been seen in four years. My thinking is that Emerging markets (“EM”) are very close to beginning a correction, and this might happen into early next year before a rally back to highs gets back underway.
Importantly, the US Dollar index’s push to two-month highs (which was discussed yesterday) looked to be negative for Emerging markets, and we’ve seen some definite signs of stalling out in ETFs like FXI 0.36% , EWW 0.03% , EWZ 0.44% , and, more recently, EZA -0.11% . INDA -0.93% , as a benchmark for Indian Equities, has been steadily weakening since June.
Overall, my thinking is that any sort of larger US Dollar bounce that happens between now and next Spring likely could result in “EM” showing some weakness.
A break in the steep uptrend for EEM would signify that this process has likely gotten underway. At present, this hasn’t happened yet, but relative charts vs. RSP 1.97% (shown later in this report) help to confirm that peaking out could be a definite possibility after this parabolic rally over the last 11 months.
iShares MSCI Emerging Markets ETF
Ratio of EEM to SPY has been strengthening all year; Now this might face a reversal in Q4
Following an 11-month period of outperformance in Emerging markets vs. Equal-weighted S&P 500, this looks to be close to reaching exhaustion and might reverse course in Q4.
As shown below, the ratio chart for EEM 0.11% vs. RSP 1.97% has now produced two separate counter-trend exhaustion signals on weekly charts based on DeMark’s indicators.
Furthermore, there are also signs of monthly charts reflecting the near completion of a TD Sell Setup (Currently eight straight months of the monthly close being above the close from four months prior).
Technically, the fact that the US Dollar index has risen to two-month highs, which has correlated directly with a slowdown in Emerging market (“EM”) performance in the last two weeks, looks to be a possible starting point for Emerging market underperformance.
The fact that both weekly and monthly ratio charts of EEM to RSP are now reflecting exhaustion is an interesting development, which seems to raise the likelihood of coming underperformance for “EM”.
EEM/RSP
Gold, Silver, and Precious metals stocks likely are showing a momentum-based top
The selloff in Gold and silver, along with precious metals/mining shares, looks to be a possible early warning sign about a coming peak developing for Precious metals.
While Thursday’s selloff might initially stabilize and turn higher into next week, my expectations are that momentum has initially peaked.
Any further rally back to new highs likely could prove short-lived and might result in negative momentum divergence.
Overall, despite all the recent enthusiasm surrounding precious metals, I view this trade as being nearly complete. It’s important to watch carefully for evidence of the steep uptrends for Gold, Silver, and precious metals/mining names starting to be violated in the weeks to come.
Such a technical violation would represent more concrete evidence of a Fall Peak for the metals at a time when many have grown much more enthusiastic about the prospects of a further rally.
Unfortunately, much of this enthusiasm was absent over the last three years. Now, following a 70% rise in Silver this year, and a slightly lesser rise in Gold, sentiment has begun to get frothy in this space.
It’s my view that any weekly close under $72 in ETFs like VanEck Gold Miners ETF (GDX 0.93% ) likely represents an important technical breakdown.
If/when this happens, I anticipate a swift move down to the low $60’s and possibly high $50’s before this begins to stabilize. For now, this uptrend is intact, but it’s my thought that the sudden uptick in downside volatility could represent a “Shot across the bow” and provide a peak in momentum. Within 1-2 weeks, this might also represent a more meaningful peak in price. Stay tuned.
VanEck Gold Miners ETF
