Two key scenarios to consider as uncertainty lingers

The recent rollercoaster in Equity prices looks to be a negative given all the uncertainty in early November ahead of this week’s CPI.  I had argued that prices might start to stall out and turn back lower, and I don’t think Tuesday’s minor bounce relieves fears of that happening.  Four key negatives are still in place:  First, Technology remains quite weak and has not sufficiently stabilized. Second, implied volatility looks quite cheap compared to the recent Cross-asset volatility.  Third, Treasury yields remain stubbornly high and have not yet rolled over.  Fourth, short-term cycles show a minor peak in place this week and possible weakness into 11/22.  Overall, until SPX 3912 is exceeded, my thinking is that there stands a better chance of SPX pulling back in the weeks ahead.  3700 is a very important spot and breaks of that would lead down to challenge and undercut October lows.  Thus, strength is required immediately.

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