SPX trend bearish, but expecting short-term low by next week

Today’s rapid plunge following the About-face broke October lows for both SPX and QQQ, which was unexpected given NVDA’s results and early rally. Thursday’s trading was decidedly negative, and breadth expanded to the downside as the selling grew more pronounced into the afternoon.  Overall, despite the break of monthly lows, I’m not betting on this decline extending too much longer before a reversal, and that likely happens next week, right ahead of Thanksgiving.  While I talked about a 3-5% decline in November, this break of the larger trend was unexpected in my work and needs to be reversed sooner than later to expect a December rally. While market breadth and momentum have been under pressure for the last few months, I still feel like the final six weeks of 2025 have the potential to show a rally, and that 2026 would be the more likely time for a lengthier decline, not into and throughout December.  As discussed, the breadth and momentum remain issues for US stock indices, and now Technology’s weakness has resulted in trend failure for SPX and QQQ.   While I respect Elliott-wave theory, Cycles, and DeMark all seem to converge on late November as providing support and a rally, Thursday’s decline was not encouraging and will likely result in fear starting to creep back into the market. Overall, the next 3-5 days certainly have the potential to show more volatility. However, I am betting on a low in Technology by Wednesday of next week, which should help the broader market bounce into December.

My thinking at this point is that SPX likely declines down to 6395-6450 and then bottoms out and rallies into December.

As shown below, Thursday’s reversal and huge high-to-low range are not encouraging, given that breadth got steadily worse throughout Thursday’s session.

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