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 and early
October (per seasonality) and that's exactly what has unfolded with
a strong correction in the SPX so far in a 3-wave pattern
Aug/Set/Oct.
Since early October, the market had a nice oversold rally that
lasted until the middle of the month, where the S&P 500 stalled
at an open gap resistance and just shy of the underside of the 50
day MA. As of Friday 20th, the SPX has retraced basically all of
those bounce gains. Last week the SPX lost -2.4%, Nasdaq -3.1%, IWN
-2.25%. Gold rallied 2.7% (not surprising given what is going on in
the world) however it likely has a major low in place. I'm
long-term bullish on gold. The 10-Year yield last week tagged 5%
and closed at 4.925% There is a potential negative divergence on
TNX, which is one hope for the 'bulls'.
What always bothered Steve and myselfis that the S&P 500
didn't test its 200 day MA on the selloff low into early October
(call it superstition or just years of observing the markets, most
of the time when price gets very close to a major MA like the 200
MA or some other major technical level, it generally tags
it). Well, that concern ended up proving out as the SPX tagged and
closed below its 200 day MA on Friday!
Last weekend Steve said the onus is on the 'bulls',
however they could not intercept the football and the indexes are
now testing their early October lows. Last weekend Steve
illustrated Leading Diagonal patternsand unless the SPX and
QQQ bounce from here via a
double bottom, those leading diagonals may end up playing
out with
that 5th wave move lower. Consider the QQQ's that are
still far above its 200 day MA, unlike the S&P 500 which is now
below it; the QQQ's may also need to test or undercut its 200 day
MA.
Big Picture: The market had a strong down year in 2022 bear
market, and the QQQs in particular have had a nice rally in 2023
(largely because of 7 - 10 stocks very narrow breadth). The
question remains now; did the bear market end in October 2022 or
has this
large retracement rally in 2023 simply been a large B-wave rally
of a bear market?? We'll see... There's certainly enough
factors to support a larger bear market (crazy unsustainable debt
levels, declining earnings for companies, coming recession,
mortgage rates at 8%, commercial real estate, China, still very
rich evaluations in the stock market).
Earnings Season: Some big earnings this week: MSFT/GOOGL on
Monday, META on Tuesday, AMZN on Wednesday, AAPL is Nov 2nd
The next Fed meeting is the following week Nov 1st/2nd
Geo Political: Unfortunately this has been one of the
catalysts to the market sell off over the last 2 weeks, and is
still a major wild card.
Interest Rates/Bonds, US Dollar, Geo Political are all potential
catalysts
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weekend writeup
Posted by matt on 22nd of Oct 2023 at 03:25 pm
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 and early October (per seasonality) and that's exactly what has unfolded with a strong correction in the SPX so far in a 3-wave pattern Aug/Set/Oct.
Since early October, the market had a nice oversold rally that lasted until the middle of the month, where the S&P 500 stalled at an open gap resistance and just shy of the underside of the 50 day MA. As of Friday 20th, the SPX has retraced basically all of those bounce gains. Last week the SPX lost -2.4%, Nasdaq -3.1%, IWN -2.25%. Gold rallied 2.7% (not surprising given what is going on in the world) however it likely has a major low in place. I'm long-term bullish on gold. The 10-Year yield last week tagged 5% and closed at 4.925% There is a potential negative divergence on TNX, which is one hope for the 'bulls'.
What always bothered Steve and myselfis that the S&P 500 didn't test its 200 day MA on the selloff low into early October (call it superstition or just years of observing the markets, most of the time when price gets very close to a major MA like the 200 MA or some other major technical level, it generally tags it). Well, that concern ended up proving out as the SPX tagged and closed below its 200 day MA on Friday!
Last weekend Steve said the onus is on the 'bulls', however they could not intercept the football and the indexes are now testing their early October lows. Last weekend Steve illustrated Leading Diagonal patternsand unless the SPX and QQQ bounce from here via a double bottom, those leading diagonals may end up playing out with that 5th wave move lower. Consider the QQQ's that are still far above its 200 day MA, unlike the S&P 500 which is now below it; the QQQ's may also need to test or undercut its 200 day MA.
Big Picture: The market had a strong down year in 2022 bear market, and the QQQs in particular have had a nice rally in 2023 (largely because of 7 - 10 stocks very narrow breadth). The question remains now; did the bear market end in October 2022 or has this large retracement rally in 2023 simply been a large B-wave rally of a bear market?? We'll see... There's certainly enough factors to support a larger bear market (crazy unsustainable debt levels, declining earnings for companies, coming recession, mortgage rates at 8%, commercial real estate, China, still very rich evaluations in the stock market).
Earnings Season: Some big earnings this week: MSFT/GOOGL on Monday, META on Tuesday, AMZN on Wednesday, AAPL is Nov 2nd
The next Fed meeting is the following week Nov 1st/2nd
Geo Political: Unfortunately this has been one of the catalysts to the market sell off over the last 2 weeks, and is still a major wild card.
Interest Rates/Bonds, US Dollar, Geo Political are all potential catalysts