“Metal Health will drive you Mad”

Equity trends remain bullish, yet SPX is close to several projected targets near 5900 which should slow this rally down as it nears the end of October. This could take place anytime between now and end of month.  However, the drying up in breadth and volume seems to be a warning sign to pay attention to following an extended run.  Technology has underperformed this week and it’s thought that the Equity rally from August lows likely could face a 38-50% retracement before Equities can continue higher.  While intermediate-term bullish thesis remains very much intact, it’s doubtful that US Equities continue to push up into and post-election without any consolidation. Moreover, November potential weakness should represent a short-term correction only, not the start of a larger decline.  Risk/reward seems poor in the short run, and SPX seems unlikely to exceed 6000 right away but could find resistance near 5900-5935. Meanwhile, QQQ should find resistance at 503-505.

Friday’s strength helped Equity indices like SPX carve out six straight weeks of gains, and with two weeks left in the month of October, could be set to finish its 11th month out of the last 12 with positive performance.

As might be expected, sentiment has slowly but surely gotten more optimistic with the stock market’s trajectory now that Equities have passed the seasonally tough part of the year. SPX has climbed roughly 13% since early August, just 2.5 months ago, or about 700 SPX points.

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