mcm daily market update 15.Nov.22

Maine trend: up

ST Trend: up

The market continued the melt-up started after the CPI numbers. The rate of ascent slowed, but bulls still managed to clip 4k, before staging the 1st steep reversal yesterday, dropping 50 points in 2h. The drop also sliced below ML, but bulls quickly recovered it in the o/n.

The overall picture is bullish, as price is above all 3 MLs. However due to the quick 250 point rise, bulls are vulnerable to a larger pullback. ML is the 1st main trend support. If that fails, it would target macro-ML. More worrying for bulls is the fact that the recent highs were unconfirmed on all GSIs. And MGSI touched extreme optimism, then had an unconfirmed high. MGSI rarely touches extremes, so that is definitely a warning this rally is very overbought near term.

In terms of bigger picture, bulls rallied so much that now the question if this 1st leg of the bear market finished at the October lows comes into play. Especially DJIA managed to almost overlap its August high, which would hint to that. NQ is still a ways off that high, while SPX is in the middle, so it remains to be seen if these will make new lows, while DJIA makes a higher low and diverge... or if they manage to follow DJIA and continue the run up.

In terms of EWT, the huge gap up 'n run off the CPI numbers feels like a wave 3, so it does seem like we would need a pullback for wave 4, then another push higher into wave 5. Given that it's OPEX this week, this kind of back and forth would fit the MMs quite well to shake out both sides. 4000-4010 is significant resistance and if bulls manage to push through, they could go as high as 4100. We will know more about how likely that is once we see what shape the 4th will have and how price reacts once it retests the recent highs.