US Equity trend in SPX and QQQ are still bullish but Equities look to have entered a choppier environment which is bringing about some consolidation before SPX can push back to new highs. While I believe that last week’s lows should represent the probable lows for November, I’m unwilling to think that an immediate push back to highs is imminent. Many investors who are involved in many AI, Quantum, or Crypto miners, not to mention Precious metals stocks, since October can attest to this market feeling much worse than what the technical trend of SPX and QQQ might suggest. While Emerging markets and various commodities have begun to strengthen, it’s likely that Crude oil is entering a trickier period in the months ahead. At present, I feel that this week’s drawdown should be nearing support over the next few days into next week. However, if November lows are violated, this would represent an unexpected, but bearish development that I cannot rule out at this time. For those concerned with risk management, the areas of SPX 6631 and QQQ-598.68 are paramount to hold.
As seen below, ^SPX has neared the area of officially filling the gap from last Friday to this past Monday’s surge higher. This “should” be an important area that results in support for ^SPX.
Technology stocks like AAPL, AMD, AMZN, and GOOGL have held up quite well in recent weeks. While NVDA has pulled back along with many other Semiconductor stocks from earlier week resistance, one cannot be truly bearish on NVDA in the near-term unless $178.91 is broken, the area near last Friday’s lows.
I had expected that sometime in November, ^SPX and QQQ might “back and fill” the rise from late last week, and that process is now ongoing. While the broader trends remain bullish, it is important for both ^SPX and QQQ not to violate early November lows. These levels are ^SPX- 6631 and QQQ-598.68. These are quite important structurally, and any violation would point to further near-term volatility in November before US Equities can officially stabilize and move higher. While I am bullish for a December bounce, it’s hard just yet to make a strong case that a push back to new highs should happen right away. Breadth remains a problem for this market for the bulls, yet sentiment is seemingly still quite subdued and makes a compelling case for buying dips during this seasonally good time.
That’s fine, provided that this trend, as seen below, does not get violated. If this were to happen, then I would address the most probable areas for an acceleration to stabilize. For now, I like buying dips, as I do not expect November lows to be broken.
S&P 500 Index
Market breadth has begun to weaken, and important to monitor this in the months ahead
My comments on deteriorating market breadth have been ongoing since October, but I wanted to share one particular chart, which I feel is helpful to keep an eye on during a time of falling market breadth.
As shown below when eyeing the Russell 3000 index, we see that the Percentage of stocks within 20% of 12-month highs has begun to roll over in recent months.
This also happened late last year ahead of the 2025 decline, and it’s important to pay close attention when market breadth starts to wane.
While at ~50%, I believe this level could certainly start to push higher and needs to be sustained into the end of the year; a continued deterioration in this would be problematic for Equities. (Note: this same deterioration in “Percentage of Stocks within 20% of 12-month highs” also happened throughout 2021 and happened well before ^SPX peaked out in early 2022.)
Markets normally start to show internal weakness ahead of corrective periods. This time looks no different. At present, uptrends are intact on ^SPX and QQQ, so it’s generally unwise to get overly concerned just yet on this warning. However, it’s critically important that Equities start to turn higher in a broad-based fashion to erase some of this deterioration in market breadth between now and the new year.
My thinking is that NVDA very well could serve as a catalyst in this regard, at least in regard to being able to take broader indices higher, given its size within ^SPX and QQQ. However, it’s up to Financials, Consumer Discretionary, and Industrials to also begin to push higher in a much stronger fashion. My view is that last month’s strength in both Energy and Healthcare shouldn’t last much longer. I’ll revisit this chart again in December.
Russell 3000 Breadth – Percent Within 20% of 12 Month High
SPX cycle does look to bottom in late November/early December
I posted my ^SPX cycle composite a few months ago, which started to drop off sharply in the Fall.
Interestingly enough, this didn’t seem to work well for ^SPX until I realized that the broader market seemed to be paying more attention to this, vs stocks like NVDA and AAPL, which have been carrying ^SPX.
This does seem to show a year-end rally getting underway soon. However, it doesn’t seem to start in mid-November. I think it’s important to recognize that cycles confirm the possibility of a choppy/down November followed by a positive December for ^SPX (at least using the inputs I have below for the various short-term cycles for ^SPX).
Bottom line, the pink line, as we’ve discussed before, represents amplitude, not magnitude. Thus, ^SPX doesn’t require a giant decline to match what the pink line might suggest below. The turning points tend to be more important than the magnitude of these swings.
However, the bias seems to be negative in the middle to back part of November, which makes it essential to keep a close eye on November lows for both ^SPX and QQQ.
For now, I don’t mind buying dips and am expecting that NVDA could serve as a positive catalyst for the US Stock market. However, if November lows are violated, this would prolong the pullback and result in some short-term technical damage. My feeling is that we’ll know a lot more within a week’s time. However, in the meantime, it’s proper to just keep a close eye on current trends for ^SPX and QQQ.
SPX Cycle Composite
Cryptocurrencies remain in weak shape for now; However, this latest period of weakness this week could represent the final pullback for 2025 before rallying in December
I don’t post Crypto technicals much in my Technical piece, but I do feel there’s a lot of attention being paid to this area right now. For those who are not subscribers to the Digital Assets team, I posted some comments on Ethereum and on the iShares Ethereum ETF (ETHA) today, which I felt like sharing. Kindly reach out to Sean Farrell for information on his team’s fundamental work, and make sure to tune in for our monthly Cryptocurrency webinars, which combine Fundamental and technical tools.
In recent weeks, we’ve seen a big leg down in Cryptocurrencies to mirror the weakness being seen across the risk landscape, as SPX today fell by more than -1.7%. Ideally, this selloff in Ethereum should test and briefly undercut the lows from 11/4, which would see ETH -7.68% Ishares ETF (ETHA) get down to $23, with an additional target at $22.23, which represents a Fibonacci-related projection of the most recent leg down from 10/27-11/4 projected from 11/10 highs.
Important to note that this structure of the selloff does suggest that Ethereum would be a very good risk/reward on any undercut of early Nov lows. While this entire selloff has proven difficult to manage given the initial sideways pattern, which then morphed into the most recent sharp decline, the good news for Bulls is that the structure of this decline continues to look like it shouldn’t persist into December, but would translate into an attractive entry point once November lows are breached. (Based on the Elliott-style ABC pattern, it should now be in its final stages.)
My own ETHUSD target initially was $5500 into October, followed by a pullback in November and then a rally up to near $9k. Unfortunately, the October rally part never materialized except for a brief rally in the first week of October. Given the extent of this recent selling, it’s difficult to make the case for $9k anymore in seven weeks.
However, I am expecting that this selloff should be completed likely within 1-2 weeks on “one final leg down,” which looks to have begun. Thereafter, I do see the combination of very poor sentiment coupled with a corrective short-term decline to likely find a bottom and rally in December into January. Thus, I still am on board with $5,500 being achievable. However, I don’t see the end of the year as being important from a cyclical perspective. Thus, mid-to-late January looks more important for this possible upside target.
Unfortunately, the last few weeks have been painful for longs. However, technically, there is a solid case to be made for buying into a decline during times of poor sentiment when the price nears the 50-61.8% retracement of a prior rally. In this case, this rally happened from April into August. Thus, we’re nearing this point, but ideally from a pattern perspective, we need to make a final washout, which looks to be happening. I don’t care to buy here, technically, for those with a 1-2 week timeframe. However, for those with a 7-10 week timeframe, I do see this area as providing opportunity, but would be ideal with ETHA down near $32-33. For ETHUSD itself, this could allow for a slight break of $3k, but ultimately provide strong support at $2775-$2800. I still like holding ETH long for those with a timeframe of 7-10 weeks or longer, and feel it becomes more appealing from a counter-trend perspective to buy dips under early November lows. The chart below highlights ETHA and the possible wave structure.
iShares Ethereum Trust ETF
