Interim Update – 11/7/2022

Good Morning:

• Futures are higher this morning. But in my view, Friday’s key levels are largely unchanged.
• Support shows at 3780 (also the Volatility Trigger), then 3755 (SPY 375).
• Resistance lies at 3833 and 3850.
• We are positively retracing the most recent sell-off, with the possibility of another leg up in the nominal 20-week wave. 
• As I have been counseling, it seemed too early to bury the market last week as the 20-week cycle typically doesn’t peak for a minimum of four weeks, even in a bear market. And eight to nine weeks is more typical.
• We are entering the fourth week today. And tomorrow could be a key turn date to watch based on our algorithms. So far, we are marking up into that date so that the turn would be in the opposite direction.
• The market loves gridlock – so even if Republicans only take the house, the market will be happy with this outcome. Still, likely this outcome is already reflected in the rally from October 13. If Republicans capture the Senate, the market could rally into the CPI report. 
• Only after the passing of these events will we see if this second rally attempt has legs.
• Keep in mind that it still takes a formal pivot to trigger whenever we identify a turn date or alert window. So we don’t just take the date and run with it.
• And there is no guarantee that the bear continues – which would mean that the bottom is in. That is not my current thesis.
• The WEM high is 3864 this week, which would fall short of the most recent peak at 3925. The WEM levels have not been reliable recently, another victim of the meme option players and their DTE preferences.
• On an encouraging note, we may regain the 5-day line today, but the Algo Trigger also needs to be conquered at 3842 to count this as a decent up leg with a chance to match the first leg from October 13 – October 28.
• And the latest CPI report comes on Friday – likely the largest volatility event of the week.
• The price is a short-term retracement of an intermediate-term bear market.
• All doubts should be resolved in favor of the bear.  

A.F. Thornton