Hello Everyone, I hope you all have had a nice weekend! Here's my comprehensive newsletter review of the markets, commodities, Bonds posted both as a Youtube Video (which I highly recommend as you can see what I'm pointing out. And our standard webpage format newsletter (contains the chart URLs)
Youtube Video of the Weekend
Newsletter October 22nd, 2023 - watch in full 1080 resolution on tablet or desktop NOT your phone
PLEASE leave a like and comment, helps the Youtube Algorithm to get out stuff more visible - I appreciate the support!
Weekend Newsletter Oct 22nd, 2023 standard Webpage Format
- contains all the dynamic chart links
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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 myself
is 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 patterns and 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 Tuesday, META on Wednesday AMZN on Thursday, AAPL is Nov 2nd
Consider the top 7 stocks in the market have an average PE of 46! So they are richly valued
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
Mean Reversion systems; unfortunately some of these held on because of a trend condition that triggered, they are close to stopping out. In the future we are going to go the conservative route and sell 1/2 once the mean reversion bounce occurs just to be safe.
KISS Trend high performance versions coming
: I plan to add a small group of high performance KISS systems in the coming weeks. We'll be charging a premium for this.
Matt
