Thanks for all your continued support and I’d like to wish you a wonderful Holiday season. I’ll be away on business in Japan until Wednesday 12/7. Barring an unusual move in markets, there will likely be no daily technical reports nor videos until I return. Thank you for your understanding.
SPX remains on course for higher prices into mid-to-late next week. Wednesday’s sharp gains look to have begun the (possible) final move from October 2022 lows which might stall out into 12/7-9. This time would line up with both Cycle composite projections from the Foundation of Study of Cycles along with Gann’s Mass Pressure index, both which seem to show consolidation in markets starting next week. While December has been traditionally a very bullish month seasonally speaking, it’s difficult to see recent gains continue uninterrupted. However, it’s imperative that movement under 3900 happens to suggest more meaningful consolidation. Even on a choppy period during the 2nd and 3rd week of December, it’s still possible that December turns out the third straight month of positive gains. At present, both Treasury yields and the US Dollar remain trending lower and are important to watch as they near meaningful support. Additionally, Technology remains the most important sector, and continued Tech strength remains the biggest key towards helping index gains show a bit more longevity.
2-Year Yield showing increasing signs of peaking out
While US 10-Year and 30-year Yields have been pulling back sharply of late, the one thing that piques my attention these days is the breakdown in the 2-year yield.
As of Thursday, 12/1’s close, the 2-Year yield has successfully broken the neckline of a one-month Head and Shoulders pattern, which was successfully validated on a close under 4.288% today.
This is a key piece of the process in suggesting the market is starting to anticipate a potential slowdown in the FOMC’s rate hikes in the months to come
Initial targets lie near 4.00%, a psychologically important level that also lines up with a 38.2% Fibonacci retracement of the rally from July 2022 lows. Overall, this looks important, and should be viewed as a positive by risk assets. As has been discussed lately, TNX likely trends lower to 3.43%, while TYX could also move towards this same level. 3.45% would mark a 61.8% Fibonacci retracement, lining up near June yield peaks.
Bitcoin rally finally looks to be getting underway
Bitcoin’s rally to multi-day highs yesterday gave the first real proof that a counter-trend bounce was getting underway. $BTCUSD shows prices having closed at the highest levels since 11/10 and volume expanded to new highs for the week.
A further rally looks likely into early to mid-December with initial targets found at 18,150 which lines up near former lows made in September/October. This looks to be a strong level of resistance that likely causes bounces to stall out, but any ability to regain $18,200 on a weekly close would argue for a larger rally to $20,000-$20,350, the latter lining up with a 50% retracement of BTCUSD’s three-month range.
Overall, until this prior consolidation can be successfully recouped, Bitcoin rallies are to be viewed as short-term, tactical rallies only. More will be needed to suggest a larger, intermediate-term rally is getting underway, and the ability to exceed August peaks would signify the first intermediate-term buy signal that could help provide the springboard for a bigger move.