TSLA could help Discretionary push up into early November

Equity trends remain bullish but fragile as we near the end of October.  Stocks, Treasury yields, and the US Dollar look to all be close to beginning a corrective pullback, which likely starts in early November but should prove short-lived and not the start of a larger decline.  Minor pullback attempts this week have failed to do much damage but should ultimately result in 5-7% declines in US Equities for the month of November. While the intermediate-term bullish thesis remains very much intact, it’s doubtful that US Equities will continue to push up into and post-election without any consolidation. Risk/reward seems poor in the short run, and SPX seems unlikely to exceed 6000 right away but could find initial resistance near 5900-5935. Meanwhile, QQQ should find resistance at 503-505.

As discussed, the following issues remain constructive for the US market:

  1. Intermediate-term bullish technical structure
  2. Healthy intermediate-term breadth levels with multiple sectors participating
  3. Intermediate-term sentiment gauges not at extremes
  4. Weekly cycle trends suggesting rallies into next Spring
  5. Bullish intermediate-term trends on many Magnificent 7 names
  6. Technology underperformance has not resulted in this sector breaking down
  7. China’s re-emergence should help areas within Consumer Discretionary along with global demand picture
  8. Short-term seasonality for final week of October is constructive for a rally into early November before any peak
  9. QQQ bullish pattern does not yet look complete and could allow for a final push up to 503-505 before stalling and reversing course.
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