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OCTOBER 2023 – SUPPORT WILL HOLD

Outlook: The choppy action that defined equity prices in August and September should subside as we head into strong cyclicality with sentiment still largely bearish, M2 money supply still well above pre-Covid trend, inflation still peaked, and policy tightening near its end than its beginning. The rise across yields and the dollar is somewhat alarming, however the resilience of risk assets suggests a bullish divergence rather than a soon-to-be falling knife.

SPY: On multiple lines of support heading into strong seasonality. 412 as final support must be broken if bearish reversal is to be confirmed.

IWM: Higher lows would be an encouraging sign and therefore must not fall and hold below 171.

DXY: My convictions of a dollar top around 105 have been dashed but overbought conditions warrant at least a temporary reprieve.

Yields: A setup for a bearish reversal in yields is in play as momentum slows, but breakouts at the long end of the curve aren’t suggestive of that outcome.

Crude: Overbought but breaking out. Target 100.  

ICLN: Reality over the inefficacy of “clean” energy is a heavy weight. Downside to 14 and furthers the evidence for bullish non-renewables.

URA: Bullish scallop calls for a retest of 31.

Gold: Has nothing going for it until it has everything going for it. Bearish.

BTC: Holding up remarkably well given the surge in the dollar and yields. With the next halving event roughly 7 months away, the setup for another leg up is intact.

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NOVEMBER 3, 2024 OBSERVATIONS

As discussed in prior weeks, broad equity price action will remain choppy around the top until the election results are clear. The worst-case scenario would...