Weekend Report for Monday, October 23
Bottom Line:
The primary US trading indices are all just above critical intermediate-term levels. The SPX, NDX and DOW are just above their October lows. The RUT is just above its double bottom of June/October 2022. Therefore, price is very close to major inflection points in all four indices.
The current phase of Auction Market Development is definitively down. From a structural perspective this is a probing for a downside “stopping price” and a potentially important low.
Breadth reached the upper cusp of downside extreme last week and VIX closed Friday just below 22, the highest it has been since last March. While both of these indicators can and relatively often do become even more extreme, when they reach present levels the stock indices are usually near a relatively significant low time-wise.
Downside levels are highlighted below. When a market is trending the guideline for counter trend retracement is always the previous days, or second day back extreme.
PDF: Weekend Report_2023_10_23
SPX
Lower KRA: 4216; 4144-4095.
SPX – Intermediate-term Auction
Potential Auction paths…
NDX
Lower KRAs: 14428
RUT
No change: The RUT is in the lower extreme of an almost year long Balance Area. A close below 1641 could be very bearish.
Lower KRA: 1660-1642
DOW
Lower KRA: 32827-32583
Internals
No change: A lot of if/and/or/but between price and internals heading into next week. Let’s default to price action.
VIX
VIX made its highest close since last March on Friday.
US 10-yr Notes
Notes/bonds have been relentlessly lower. The trend is most certainly down but be alert for a potentially sharp retracement at anytime.
US Dollar
The Dollar is offering a great reward/risk trade. Consider taking the break of the minor Balance Area.
Gold
Gold is about as vertical as a contract gets. Favor longs, but there is no graceful entry and this contract could pull back sharply in a retracement at anytime.
Crude
No change: Obviously, Crude is likely to be wildly volatile for a while. Be aware of that. 81.70 is the key downside level.
