ZT1! TN1!
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ZT1! TN1!
XAUUSD XAGUSD
Rule number 1: Never bet against me.
Rule number 2: Refer to rule number 1.
Rule number 3: Refer to rule number 2.
SOXX shed 4% at one point after my post, as I expected. I think there'll be good short opportunities in ES1! and NQ1! over the coming sessions.
I think there will be further downside after this bounce as the market rotates from AI into non-AI trades, as evidenced by SOXX staying flat while the indices rally hard.
For those who took the trade when XAUUSD was below 3.9K and XAGUSD was around 49, a tight stop is paramount. If we do enter an equity bear market, a cross-asset liquidation would be inevitable, gold included.
ES1! rebounded overnight to retest key resistance at 7,660 from below and has stalled precisely at the level I gave the other day. NQ1! is testing a similar resistance line around 28850.
The market has bounced a little from Friday's bloodshed. Friday's levels are pivotal, as several key assets and indices tested their respective support that day.
AAPL and PLTR report after the close today, and the election is tomorrow, with a Democratic sweep expected. Price action over the next few sessions will be particularly important in deciding the path forward.
Bonds have rebounded sharply from the swing low where I called for a rebound.
I expect this rally to end in the coming weeks if not days. Once it does, we should see the positive correlation between oil and yields resume, putting further pressure on equities.
Given the overall technicals, if the market can't rally over the next few sessions, it will become exponentially harder to keep it from entering a bear market.
GDX has now filled all the gaps it left in August, just as I expected.
XAUUSD fulfilled my prophecy on Friday by trading below its July low and is now below the key 3.9K-4K support zone.
Note that a strong LT trendline sits just below spot. Just as importantly, XAGUSD is trading close to its generational support around 48, which has been in place since the 1980s.
A bounce from here is highly likely. XAUUSDXAGUSD
Depending on the macro backdrop, however, gold could break below that LT trendline and find stronger support around 3.4K if the Iran war drags on and we continue to see no progress toward a peace deal. Like gold, silver also has another major support below its current 48 support, in the sub-40 area.
Tick Tock......
CL1! BZ1!
KOSPI
MAGS
SOX price action during the dot-com era has predicted almost every swing low and swing high for us since SOX topped in June.
And SOXX generational resistance line since the GFC has also marked multiple swing highs and lows over the past few months.
"This time is different."
No, it's not.
It's all just the same thing, over and over. We can't help ourselves.
And you and I can't control it, or stop it, or even slow it, or even ever so slightly alter it.
We just react.
And we make a lot of money if we get it right, and we get left by the side of the road if we get it wrong.
The data center trade is also sitting right at key support. DTCR
Meanwhile, SPX is hanging on for dear life at key support. NDX, the most AI-heavy index, has already broken cleanly below key support.
As I mentioned the other day, broad market breadth has remained fine in the past few weeks despite tech weakness, as the RUA Russell 3000 has shown. Yesterday, however, it slid and tested its horizontal support again. This is a very important level to watch. If it breaks, the unwind will no longer be contained to AI but will spread to the broader market.
NVDA
Significant break.
Turbulence ahead!
Brace! Brace! Brace!
XAUUSD just printed below its July low.
Another prophecy fulfilled.
ES1! is testing 7,650 as I'm writing this. Despite the negative earnings reactions across major tech names, I do think this level should hold. Indices, especially tech, have pulled back over the past few days, but breadth remains fine.
Sentiment heading into the election is quite negative. Combined with the recent earnings-driven pullback, that could set the stage for a sharp rally if election manipulation produces a Republican landslide.
Price action today and in the next trading session will be critical tells for the election result. We all know by now how common insider trading has become under this administration. If a Republican victory is already predetermined, the market should rally hard over these two sessions despite the negative earnings reactions.
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The election is next week, with Republicans expected to lose control of both the Senate and the House. AAPL and PLTR are the only two major tech names still due to report before the election. Both are scheduled for November 2.
XAUUSD is breaking down, with spot gold just 0.5% away from its July low. I have remained bearish on gold since the U.S.-Iran war began. Even during the countertrend rally in August and September, I repeatedly warned that the rally had no fundamental support and expected gold to test and break below its July low. The 3.9K-4K area is strong support, and gold may spend some time chopping around here.
Our core thesis still stands. No peace deal → oil remains elevated → higher inflation → higher yields → downward pressure on non-yielding assets like gold.
INTC fell as much as 26.5% after hours before bouncing off the 67 support I gave yesterday. If 67 breaks, the next support is 52.
AMZN is hanging on for dear life around the 225 support I gave yesterday.
Yesterday's FOMC proved to be a non-event, as we expected, especially compared with the previous two meetings. NDX's intraday range was just 0.78%, versus 2.81% on July 29 and 1.67% on September 16.
AMZN, INTC and SNDK report after the close today. So far, all the major tech earnings have been met with negative reactions regardless of the numbers reported, except MSFT, whose gains are already fading in premarket.
Despite the NDX selloff over the past two to three weeks, SPX remains only about 1.5% below its ATH. This is consistent with my call for a bond rebound that would support equities in the ST. As I have mentioned several times in previous Tactical Positioning, I do not expect a large selloff into the election. I think the market is underpricing the risk of a large selloff after it. At the same time, there is a small chance of an explosive post-election rally, as we saw in 2016, though I put very low odds on that outcome.
Months ago, when oil rebounded from our pivot levels around 70 into triple digits, I outlined the path into the election. The broad framework was the 70s on the downside and 100-120 on the upside, with 100 as the normal upper bound and 120 if the situation got out of control. That has largely played out.
Once again, there has been no progress whatsoever toward a peace deal. Traffic through Hormuz has improved significantly, but as I have said, keeping oil prices high is in Tehran's best interests. It does not need an explosive spike. As long as oil stays elevated, time is on Tehran's side, not Washington's.
Oil inflation generates second-order effects that can make inflation very sticky. We are now eight months into the war, and those effects have yet to materialize. I expect them to emerge next year.
The bond rally is technical rather than fundamental. I called the yield tops weeks ago, and Treasuries have since rallied hard across the curve despite no visible drop in oil prices. I expect this rebound to end in the coming weeks as the positive correlation between oil and yields reasserts itself. Unless we see a material change in the Middle East, rising yields across the curve seem to be the only path forward.
This technical bounce has been among the most lucrative trades this year. Congrats to those who took it. As always, trail your stops to protect your gains.
NQ1! was rejected at the horizontal resistance following the earnings releases. I would have shorted that rejection had it happened during RTH. ES1! as been trapped in a very narrow range between 7,660 and 7,840, which I expect to break as soon as Election Day.
AMZN continues to trade within our LT rising channel. ST resistance sits around 290, with an extension toward 302, while ST support is around 225. I doubt tonight's earnings will take it to either end of that range, whether in after-hours trading or by tomorrow's close.
INTC's generational channels capped its upside a few months ago. Given the cyclicality of the industry and where we are in the broader cycle, the odds favor tests of support at 67 and 52 in the coming months. That is consistent with our expectation of a selloff after the election.
I have received a lot of feedback over the past few weeks, and based on that feedback, there will be major changes to the content I provide to this community.
Tactical Positioning will cease, as the majority of you fail to appreciate the finesse behind these charts and their predictive power. That does not mean all the content from Tactical Positioning is going away.
Future content will focus primarily on trades, setups and the analysis behind them. Subscribers who were here in 2024 and 2025 will find this familiar. This is a return to the classics. Shorting near the top ahead of the tariffs in Q1 2025, going long near the bottom and shorting gold near the top are just a few examples.
Charts and analysis from Tactical Positioning that are relevant to a trade or setup will continue to be provided. Updates will come when I think they are needed, rather than on a weekly schedule that can be untimely and contain more irrelevant information than relevant information. This post is an example of what future content will look like.
I also want to align expectations. I do not like regularly scheduled updates because sometimes there is simply nothing to update. No significant price action is expected, and the best thing to do is step away from your screen and enjoy your life.
When significant moves are happening, I could publish several posts in a single trading day, as I did ahead of Liberation Day and during the first few days of the Iran war. That is how it should be.
NVDA's Wednesday announcement showed that the spending commitments are still growing. It is advancing $1.1B to reserve KYEC capacity and plans to expand substrate capacity to 2.5 times its current level over three years. SOXX nevertheless continued lower. The supplier is securing capacity today for demand expected over several years, while financing that demand is becoming more expensive. The next stage of this story is whether customers can fund deployment and earn a return on it. Strong chip demand does not close that gap.
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