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WHEN PRIOR ACTION IS REVERSED IN ONE GO, PAY ATTENTION

Outlook: The upward trend across equity indices, powered by artificial intelligence, will continue to drive further growth even though some indicators suggest these markets are overbought. It is expected that some of the profits from the large, dominant companies that have largely influenced 2023’s growth will be redirected into smaller companies and riskier investments (for example, Bitcoin). This comes as overarching macroeconomic themes such as the apex of interest rates, the peak value of the dollar, and the culmination of policy measures coincide with the ongoing strength of the economy.

Broad Equity: The broad cap-weighted indices have broken out and will continue to drive appreciation through year end. QQQ to lead and pave the way for SPY. Failure to reach new lows in IWM is compelling and suggests more gains ahead.

Yield Curve: With longer dated treasuries continuing their sideways action, I expect falling inflation to present itself in an eventual downward move, not upward, as prospects for future growth subside. Across the curve it’s a matter of when, not if, buyers emerge. I have a high degree of confidence this occurs by year end.

DXY: The coil formation presents signs of bearish bias in line with my expectation that the dollar will see 100 before it sees 106, and eventually lower.

Crude Oil: Slowing momentum across crude and the entire commodity complex does not suggest the move is over. The absence of capitulation alongside bullish fundamental beliefs offers the playbook for another move down or sideways action at best.

Bitcoin: A strong bounce off the trend line that 3 of 4 as final support is encouraging to see. BTC is ready to continue its cyclical ascent bolstered by firming sentiment and an April ‘24 halving event.

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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...