SOX nearing critical support & stabilization looks likely into next week

A minor US Equity pullback is underway but arguably should be complete by next week’s FOMC meeting at the latest and potentially as early as tomorrow.  As discussed, trends from mid-November and August remain quite constructive, and it remains tough to be too bearish in December. Multiple days of negative market breadth gave ample warning signs into early December that consolidation could be possible and this directly fits into the normal seasonality trend for middle December following gains of 25%+ into this month.  However, broader trends remain quite positive, and until/unless SPX and QQQ break the uptrend in early November (near 6006), pullbacks should likely prove buyable.  Initial support for SPX lies near 6017.  

Tuesday’s breadth was more in-line with what might be expected on a -0.30% “Down day” as nine sectors out of 11 fell in trading while Technology, Materials and REITS all led to the downside.

While there were a plethora of cyclical and breadth-related reasons to think SPX might require consolidation into mid-December, the weakness largely occurred in the Equal-weighted indices up until Monday of this week.  The last couple of days of weakness have resulted in more broad-based weakness out of most sectors, but still remains short-term consolidation as part of existing uptrends.

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