Software continues to make strides vs. Semiconductors

Equity trends remain bullish from early August but have shown mild consolidation over the last two weeks which has resulted in a 2% decline in SPX. While various sectors like Technology, REITS, Industrials, Energy & Utilities have all drifted lower since mid-October, there hasn’t been sufficient damage towards thinking a big selloff is underway. Both US Dollar and US Treasury yields are all getting close to technical levels where they should stall out and turn lower this month. Overall, I suspect that rallies in both US Equities and Treasuries occur after the US Election as uncertainty gives way to clarity, at least with regard to congressional races. SPX should find initial resistance near 5900-5935.  Meanwhile, QQQ should find resistance at 503-505.

SPX price action has proven quite choppy over the last month, but this hasn’t served to deliver much, if any, of the correction that is normal during August-October of most Election years.

Rather, gains in August, September and October now are starting to fizzle out a bit as indices have reached the US Election, and breadth gauges show a pronounced pullback in the “Percentage of SPX names above their 10-day and 20-day moving averages”. 

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