S&P 500 futures continues to stairstep lower. I am looking lower. Price ideally stays under 3583. Initial focus is 3456.75 with 3506.50 as a possible bounce spot. On the sentiment front, hedge funds are all in and short interest is at an all-time low (see charts below).
11/18 – Neither SPX or the Nasdaq have broken above their reversal day highs from last week (11/9). What’s more, SPX has reversed yet again from the line that connects highs since 2018. Don’t forget that this line crosses major pivots for the last 88 years (monthly chart is below). U.S. equity valuation is at a peak as well (see 2 charts down). I’m a bear up here.
The USDTRY decline is in 5 waves so expectations are for a 3 wave rally before additional downside. 7.7787 is initial resistance but respect potential for a deeper retracement. The upper end of the resistance zone is the 61.8% retrace of the decline at 8.17.
USDCAD made an inside week last week at the lower Bollinger Band. I call this setup ‘inside BB’. Inside BB tends to occur at turns. Add this to the list of evidence suggestive of a low in USDCAD.
11/18 – The short term corrective drop has played out in USDCAD and it’s worth trading against today’s low following the late day reversal higher. It’s early but a level to keep in mind on the upside in the coming days is where the rally from the November low would consist of 2 equal legs at 1.3279. Another reason to trade against today’s low is that futures traded above and then below VWAP from the high (see futures chart below, which is quoted CADUSD) and an hourly volume reversal triggered.
USDJPY also made an inside BB last week. Near term pattern is unclear but any short term upside impulsive action would suggest that a low is in place. Stay tuned.
11/17 – USDJPY is trading at the 61.8% retrace. If there is anything bullish about USDJPY, then I’d expect a bounce here but now I’d also be aware of resistance at 104.80-105.00. Confidence in upside is nil until a break above the trendline. Interestingly, there are several bearish setups in Yen crosses that deserve mention.
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