Stabilization near support is positive; Rally looks likely next week

US Equity trends remain choppy, but bullish, and both SPX and QQQ look to be stabilizing near key support, which likely can lead to a bounce next week. Friday’s reversal looked important following the second day of sharp weakness, and the rebound helped many important Technology stocks like NVDA, MSFT, AMZN, and GOOGL close well up off their lows after early losses. Sentiment polls like AAII, meanwhile, showed bearish percentage readings at nine-week highs, which speaks to the sense of unease in this Equity market despite any evidence of trend damage. Overall, I expect that a bounce should be forthcoming after a difficult start to November, and NVDA might serve as the catalyst for a market rally. As always, given the ongoing breadth deterioration, it’s important to watch for any evidence of trend damage, and this would happen on a break of November lows. As discussed yesterday, the areas of SPX 6631 and QQQ-598.68 are paramount to hold. Until/unless these are violated, it’s right to be bullish and simply use this recent consolidation as a chance to buy dips.

As seen below, $SPX looks to be making the same bullish Friday reversal that happened this time last week. Following some early weakness after an early decline, $SPX managed to reverse sharply off early lows. This is encouraging following a choppy week of consolidation.

It’s important now for $SPX and $QQQ to make a strong rebound off these levels without any further backing and filling.  As discussed, the areas at $SPX- 6631 and $QQQ-598.68 look important and should not be violated in order to keep this recent uptrend intact.

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