Westbound Thoughts
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The two looming events this week are the election on Tuesday (whose results, I suppose, will be finalized sometimes before the end of 2022) as well as the monster of them all, the CPI report on Thursday morning. The trauma from October 13 still lingers in the air, but I’ve got a hunch that it’s going to be payback time for the bears.
Now that the futures markets are open, everything is red, which I appreciate. It’s nothing dramatic, but let’s face it, the clawback that happened in the final hours of Friday was just plain dumb, so it’s nice to see it getting at least partly erased. None of this is going to amount to a hill of beans by the time we’re deep into the trading session on Thursday, however.
ES Chart
The big victory from last week was the double failure we saw on the S&P. First, we broken the ascending trendline that was anchored to the October 13 low, and second, we are again beneath major Fibonacci resistance.
ES 4-Hr Chart
What I find particularly interesting is what happened with the Dow. Because tech stocks have been getting blasted to smithereens (and it’s oh-so-richly deserved), “investors” are assuming that if they jump into the likes of old school stocks like Caterpillar (NYSE:CAT), everything will be just dandy. Thus, what had taken two months to achieve earlier (June 15-August 15) now took only two weeks. Notice how much more narrow the right rectangle is. It illustrates how compressed the rally was, and my assertion is that it can unravel just as swiftly.
YM 4-Hr Chart
Crude oil is at an interesting juncture. For the moment, even though it’s down almost 2% as I am typing this, its bullish base (lower horizontal) is still intact. This could break, of course, and if it does, I think we’ll finally be done with this energy mania. Otherwise, a push above that higher horizontal would mean an across-the-board ascent in both crude oil and, I believe, precious metals.
Crude Oil 4-Hr Chart
The only sorta-kinda “holdout” in equities right now is the small caps futures (RTY) since, as with crude oil, the bullish base is still intact. But, as with crude oil, it only takes one mean old down bar to crack that sucker.
RTY 4-Hr Chart
Last week overall was quite good to me, and I’m optimistic about the week ahead. I’ve got a fair amount of buying power (18.5%) at the ready, and I think Thursday from 8:30 a.m. EST to 10:30 a.m. EST may well set the tone for the rest of the trading year, or certain through the end of November. I look forward to being at my usual desk on Monday in the wee hours of the morning, and I’ll see you there.
