Near-term US Equity trends are bullish, and SPX and QQQ have pulled back from the highs of the trading channel down to near the lows over the past week. Despite yesterday’s US equity index lows not holding, the undercut of this support does not turn the trend bearish. Technology has weakened this week, but has not broken down, and Technology ETFs like XLK and RSPT both are trending near the uptrend line support, which should be important as this first week of November comes to a close. While the bifurcation between large-cap Technology/Discretionary and the broader market has grown more severe, it’s still likely that SPX could power higher into mid-November given the intermediate-term momentum and structure of stocks like AAPL, NVDA, GOOGL, and TSLA. Overall, I expect that US stock indices have entered a much choppier trading environment between now and the end of November. Ideally, this might play out as follows: A short-term rally back to new highs for SPX and QQQ which is then followed by some backing and filling back down to revisit the lows of this channel again into late November. This would align with my cycles and provide a very attractive entry point into late November or the first week of December, before a push back to new high territory.
Thursday’s drawdown failed to sever long-term support for ^SPX, and both ^SPX and QQQ pulled back to levels thought to be important.
This doesn’t hurt the short-term technical picture for US Equity indices, and as daily charts show below, ^SPX has simply gone from the upper end of its intermediate-term trend channel back to the lower area of this channel.
QQQ, meanwhile, has pulled back to test former highs, which were made in early to late October, and has filled the gap from October 23rd in the process.
Given the ongoing bullish chart structure of stocks like NVDA, AAPL, GOOGL, TSLA, and most of the Semiconductor sector, it remains difficult to make too much of this recent selling pressure. If/when more evidence of meaningful technical deterioration begins to take place.
However, it does remain important to highlight the ongoing breadth deterioration and the inability of sectors like Financials, Consumer Discretionary, Industrials, and Communication Services to have made any progress in the past week. While I do feel that this could create a choppier trading environment for this month, I’m unwilling to think this equates to markets pulling back sharply throughout November.
At present, the risk/reward appears favorable for a bounce, and I expect this to likely get underway Friday or Monday of this week, higher over the next week.
S&P 500 Index
XLK, RSPT have both weakened to short-term support
It looks too early to give up on Technology. Despite the weakness this week in NVDA, MSFT, and META within the Magnificent 7, the Technology sector as a whole has not broken support.
The “Mag 7” itself is in stronger shape than the broader Technology sector, as stocks like GOOGL and AAPL have shown precious little damage.
Overall, I expect that XLK, as shown below, likely holds trendline support and turns back higher over the next week.
Technology Select Sector SPDR Fund
Sector performance shows why strength is necessary sooner rather than later
As shown below, only three sectors have been higher over the last rolling five-day period, while only one sector out of 11 (Healthcare) has been higher over the last month (Performance shown based on the 11 Equal-weighted Sectors representing the S&P 500).
Thus, the bifurcation in market performance has grown more severe in the last month, as seven of the 11 major sectors (based on ETF performance) have been lower over the past month.
My analysis showed earlier this week that both Consumer Discretionary and Financials look to be near important short-term support.
Moreover, now Technology has also pulled back to key levels, which likely should hold in the days ahead.
Some of the areas of strength recently have come from areas that had underperformed for most of 2025 and have happened in sectors like Energy and Healthcare. My thinking is that outperformance in both of these sectors should prove short-lived and encounter resistance in mid-to-late November.
Invesco S&P 500 Equal Weight ETF
AAII Percentage Bulls have now retreated to the lowest levels in more than three weeks
Today’s AAII report served to confirm the jittery bias, which was thought to be a likely outcome given the weakness in Equities over the past week.
While SPX has managed to push higher to record six consecutive months of gains to finish out the month of October, the broader market has proven largely unchanged since the month of July.
This nervousness of the Supreme Court’s Tariff outcome, the implications of the US Govt. Shutdown, and the poor performance of many sectors in recent months, has continued to act as a weight on broader investor sentiment.
At just a +1.7% difference between Bulls and Bears as of this past week’s survey, it’s right to continue to acknowledge that investor sentiment has not reached speculative levels.
My view is that it’s difficult to experience a larger drawdown given such muted investor sentiment. While this is just simply one investor poll, it largely mirrors what many Institutional sentiment polls also show: Sentiment has improved from April lows; Yet it’s still largely Neutral, not bullish nor bearish.
Sentiment Votes
Energy has been this past week’s best performer; However, technically speaking, I do not expect that to last much longer
Energy has certainly stabilized as a sector in recent weeks, not dissimilar from WTI Crude oil. However, the recent gains don’t look to be meaningful on an intermediate-term basis, and look largely short-term in nature.
As shown below, Energy relative to S&P 500 in Equal-weighted terms has begun a short-term uptrend, which started last week. However, the intermediate-term trends remain firmly negative, and the supply/demand picture for WTI Crude itself also suggests Crude should begin to turn back lower in the near future.
Given cycles and technical structure make a strong case for Crude to fall back to the low $50’s, I’m reluctant to chase any minor lift in Energy in the weeks ahead.
RSPG/RSP
