my writeup for the weekend

Market Comments: Last spring we made a predication that the market would likely hold up and rally throughout the summer into late July, then experience a correction in Aug/Sep (per seasonality) and that's exactly what has unfolded. 

Currently on the markets as you know we were focused on coil patterns on the indexes and those all broke to the downside last week (did any of you act on those?). The options we were discussing were: 1. either a shallower wave 4 consolidation (least favored), 2. a standard 4th wave zig zag deeper pullback to the low 4300's to mid 4200's (which I have been favoring), or 3. a major top was put into place in late July. Given the fundamental backdrop, the unfathomable amount of debt, Interest rates at 5.5% now, 8% mortgage rates, also the market is not cheap evaluations are very high, and this has been the narrowest rally we've seen in our lifetimes - it's passible that we could have put in a major top in July and not push back to new highs. 

For a 4th wave scenario 'Bulls' need to keep the SPX above the point of recognition gap from early June at 4220), below that price would seriously start the favor that the highs are in and the next major rally will ultimately form a lower high.

With all that said - make sure you have an exit strategy that fits your risk tolerance and trading style. If that's the daily KISS systems, the major indexes (SPY, QQQ etc have been flat as their STS smart trailing stops were all hit). Also the big cap tech names that dominate the market (AAPL, GOOGL, AMZN, NVDA, MSFT, META, TSLA) - the KISS systems are also flat. The weekly SPX KISS has a wide STS stop at 4250 if that's what you are following. The point is, make sure you have some sort of exit strategy and plan in place. 

The market is quite oversold here in the short-term and could bounce from here, but oversold is not a buy signal, so anything can happen. The market ultimately is going to need some sort of catalyst to put in a good bottom, such as the US Dollar and the 10-Year Yield coming in. 

Mean reversion systems: While the KISS Trend Following systems are flat, Two of the sub systems out of 22 systems have 1st and 2nd entries on SPY and ES (Trend/Pullback and QE BTS). That's the natural of these mean reversion systems, they scale into pullbacks and are early at times. Should the market go lower we may see 3rd entries for these and possibly other sub systems start to trigger. 

Key Events for This Week:

1.Tuesday: Various housing data (FHFA housing price index, Case-Shiller home price index, new home sales, consumer confidence
2. Wednesday: Durable Orders/Goods ( POWELL SPEAKS at 4 pm EST the market close!!! )
3. Thursday: GDP 3rd Estimate, Initial Jobless Claims, Pending Home Sales, Natural Gas Inventories
4. Friday: Adv Goods, Inventories, Personal Spending, PCE prices, Chicago PMI