Q4 Rally Confirmed

S&P 500 made the move, breaking above the key 3,795 – 3,810 zone. Given the outside markets, the pullback would represent a buying opportunity, and the MSFT, GOOG earnings have indeed provided a profit taking opportunity as I warned about well before yesterday. Now, we‘re looking at the depth of the pullback and depending upon the degree of disappointment over new home sales later today, for a possible return to the low 3,800s – that would present a buying opportunity for the 500-strong index as smallcaps are leading higher, USD is wobbling as I told you on Monday it would, and yields with real assets and cryptos have dealt in resolutely with the premarket weakness yesterday.

After wild gyrations when I forecasted hot consumer inflation figures that would crater the markets, and me going bullish the day after CPI (on Oct 14) in line with the extensive Oct 10 analysis predicting the Q4 rally to start on the CPI release, the hypothesis was confirmed by the markets even as it dealt me a few whipsaws since. The Q4 rally is underway, and I‘m just stating the obvious that the dips (including those to scare you out) are to be bought – and should one happen later today, that would be a gift.

Yesterday‘s performance in oil stocks confirms that real assets are to join in the upswing even if miners are somewhat lagging and copper did struggle yesterday. Cryptos reflect and confirm the risk-on turn as established (didn‘t take too long since I talked their bullish bias on Monday), long-dated yields have topped for now, and dollar‘s troubles (also featured in Monday‘s analysis) are to provide tailwinds.

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S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

S&P 500 did overcome the pattern of lower highs, and the bulls have the upper hand now. No need to wait for three consecutive closes in stating the obvious. The poor guidance of MSFT and miss by GOOG provide a welcome justfication for retreat.

Credit Markets


Bonds are now confirming the upswing in stocks, and the top in yields looks to have been reached – during early 2023 though, I am looking for Treasuries to resume their decline once again, but first let the decent upswing on deteriorating real economy prospects (before the Fed‘s pause / pivot) come.

Related: Recession Fatigue: Consumers Begin To Break