Continuing Monday‘s sideways pattern, the S&P 500 tested 4,365 without reaching solid 4,360 support, and just broke higher. Stocks indicate no consolidation as the Q4 rally with decent soft landing undertones talked about in Sat video would happen, is here. This isn‘t about the strong seasonality of the first three weeks of Nov (Nov is the best month) – the good part is the Yellen manoeuvering, whereby the Treasury diverged from the more typical 20% short-term debt to 80% long-term debt to favor the short durations more, which means the supply of long-term debt is lower, and that helps yields retreat and stocks rally. This is but one of the significant factors at play that paved the way for the Q4 rally as I have argued in the extensive Sunday article.Meanwhile, gold has offered an interesting entry point, having become oversold on lower time frames – all called live and published. I‘ve also made appropriate ES and DAX moves in our intraday stocks channel – yielding first fruits already yesterday.Let‘s move right into the charts (all courtesy of www.stockcharts.com).
For all the decline in breadth warnings, I would look at these to be overcome, and instead be revealed as signs of consolidation.
It‘s about tech leading yesterday, and away from the 200-day moving average break in S&P 500 where Nasdaq showed bullish divergence. Primed to catch up in cyclicals and value in the next push.
Stocks and Sectors
AMZN made quite a bullish progress since I spoke of it positively on Oct 12 – together with MSFT among my best stock picks. In the current stage of the business cycle, it‘s likely to keep doing well during the Q4 rally.
Crude Oil
Crude oil at $76 would put up a better fight than at $78 – accumulation is starting to emerge, and I don‘t look for OPEC+ production quota (cuts not expiring) changes. The current move reflects that the conflict hasn‘t spread to Iran yet.More By This Author:Fearing USD And Yields Upswing?Making Sense Of Sharp Turns Goldilocks Latter Innings Indeed
