Keeping SPY Bulls in Check

S&P 500 ran higher on BoJ unannounced bond purchases and core PCE better by 0.1% in yet another Fed pivot bet replay. The juice though ran out relatively fast, and stocks started reversing in the 4,365 area already – and yields did the same, meaning the bear was slowly waking up. Quarter end positioning resulted in buying spree at the close, which gives a preview for what to expect in Q4 – I think a general stock market upswing on still robust economic data without too many job market or manufacturing cracks in the dam, with bond market volatility making for a slightly less volatile quarter towards its end.

October will be probably marked with more selling still before both sticky inflation (see here core and headline, going beyond oil prices) and approaching recession (that would be easily recognized by normalizing yield curve), sink the stock market advance coinciding with the Santa Claus rally in terms of time. Also the 10y yield hasn‘t yet peaked – this being apparent in XLF performance – and is to target 4,85 till 4.90% easily.

If I were to highlight once again what‘s amiss in the market, it‘s the FOMC projections that contradict each other, indirectly proving that recession next year is the most likely outcome required if inflation can be brought down towards 2%. Similarly, the job market expectations are too rosy, if wage pressures (private sector cost employment index) that‘s also feeding inflation, is to ease. Speaking of recession, only the time of its inevitability being realized, is when long-dated Treasuries catch a fine bid. During this resilient real economy with high fresh debt issuance and tightening Fed, not really.

Consider that within the last 1 year roughly, extra fiscal boost via Inflation Reduction Act and later ($1T), bullish institutional equities positioning in futures (pendulum swinging towards longs and closing prior shorts to the tune of almost $1T), and drawdown in reverse repos from the Nov 2022 top of $2.6T to $1.4T now, have all kept equities and real economy afloat through 2023, and only reverse repos are what can kick in next year on arriving recession, practically speaking as discretionary spending is constrained via the debt ceiling deal and institutional posioning is just about maxed out by historical comparisons. Reverse repo drawdowns can be viewed as negating the tight Fed, and enabling direct bid for Treasuries, which is what the Treasury welcomes…

As usual, check out please Saturday‘s video for extra nuggets in the explanations, as regards stocks too.

Keep enjoying the lively Twitter feed via keeping my tab open at all times (notifications on aren’t enough) – combine with subscribing to my Youtube channel, and of course Telegram that always delivers my extra intraday calls (head off to Twitter to talk to me there), but getting the key daily analytics right into your mailbox is the bedrock.
So, make sure you‘re signed up for the free newsletter and make use of both Twitter and Telegram – benefit and find out why I’m the most blocked market analyst and trader on Twitter.

Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 of them.

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

4,340 weren‘t overcome on a closing basis, and once 4,315 are broken on a closing basis, the downswing starts again. The fact that XLY was strong Friday (TSLA), means that the buyers won‘t give up too easily. Financials, those I see still struggling while Nasdaq relative resilience to rates (be it on their rise or magnitude of taking advantage of temporary rates retreat) will determine just when we see the decline towards 4,260 at least continuing. Monday‘s close above 4,365 means that the bears have gone to sleep again, and downleg continuation is called off.

Ouf of the weekend news, one is bullish, the other bearish. The temporary solution for avoiding shutdown vs. AAPL iPhone 15 balance themselves out to a certain degree – therefore, the opening gap and direction taken within first hour of Globex open, would be telling.

Premium content (covered in full within Monica’s Trading Signals) reserved for Monica’s Stock Signals subscribers. Log in to your premium account to read it.
Full scale premium content reserved for Monica’s Trading Signals subscribers. Log in to your premium account to read it.
Premium content (covered in full within Monica’s Trading Signals) reserved for Monica’s Stock Signals subscribers. Log in to your premium account to read it.
Full scale premium content reserved for Monica’s Trading Signals subscribers. Log in to your premium account to read it.

Thank you for having read today‘s free analysis, which is a small part of my site‘s daily premium Monica’s Trading Signals covering all the markets you’re used to (stocks, bonds, gold, silver, miners, oil, copper, cryptos), and of the daily premium Monica’s Stock Signals presenting stocks and bonds only. Both publications feature real-time trade calls and intraday updates.
While at my site, you can subscribe to the free Monica‘s Insider Club for instant publishing notifications and other content useful for making your own trade moves.
Turn notifications on, and have my Twitter profile (tweets only) opened in a fresh tab so as not to miss a thing. Thanks for all your support that makes this great ride possible!

Thank you,

Monica Kingsley
Stock Trading Signals
Gold Trading Signals
Oil Trading Signals

Copper Trading Signals
Bitcoin Trading Signals


* * * * *

All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.

Sign Up for Monica’s Insider Club!

It’s free and you’ll get my message right when a new post goes up.

Scroll to Top