Well that was quite a four-day stretch in the stock market. Yet the rally started Tuesday, a day before we knew the election results. Of interest, an anonymous bettor was originally projected to have made $48 million (but blockchain data from Chainalysis says the profit was closer to $84 million) on an election bet placed on the crypto-based trading platform Polymarket. For the four days, the S&P 500 (SPX) and S&P 100 popped 5%, the Nasdaq and the S&P 400 rocketed 6%, and the QQQs added 5.8%. The big winners were the small caps, with the S&P 600 (SML) and Russell 2000 (IWM) each up more than 8%. The SML (1508) made an all-time high (ATH), exceeding its previous ATH from November 2021 and completing a large and complex cup-with-handle formation. Based on the depth and length of the bullish pattern, SML could see initial measured moves to 1,765-1,900, and possibly much more. Using a monthly logarithmic chart, a trendline formed off the peaks in 1998, 2006, and touched in 2007, 2018, and 2021, is estimated to come in at over 2,000. The four-day SPX sector performance was broad, led by Consumer Discretionary (+8%); Financial, Industrials, Information Technology (+6%); Energy (+5%); and Communication Services (+4%). For the near term, and with the big round psychological number of 6,000 in sight for SPX (exceeded intraday Friday) and 20,000 for the Nasdaq and NYSE, a pause/pullback may come soon. Or maybe the bull just continues to run over the bears. A blow-off move to the upside is not out of the question. (Mark Arbeter, CMT)

L3Harris Technologies provides products for the command, control, communications, computers, intelligence, surveillance, and reconnaissance, or C4ISR, market. The firm produces uncrewed aerial vehicles, sensors, and avionics, provides military and commercial training services, and maintains the US Federal Aviation Administration's communications infrastructure. In July 2023, the company acquired Aerojet Rocketdyne, a key supplier of rocket motors to the space and defense industry.

Back on October 9, we started to talk about Information Technology waking up after three months of technical basing by some in the sector. We wrote the following. "Technology was led by a few major semiconductors, including NVDA (+4%) and AVGO (+3%). NVDA has been tracing out a bullish continuous inverse head-and-shoulders, while AVGO has been forming a complex double bottom since the middle of June. Both are very close to completing these patterns and possibly breaking out to all-time highs. One concern about jumping back on the semi train is that we are not seeing other stocks completing bases and many are nowhere near highs. That can be rectified, but the strongest industry moves occur when the majority of stocks are participating." Little did we know how prophetic those last two sentences were and in no way did we expect the obliteration of some of the semis on October 15. ASML was destroyed, plunging over 16% after providing disappointing 2025 guidance. It was the company's worst day since the pandemic and, prior to that, during the IT wreck in 2002. KLAC plummeted 15%, and LRCX and AMAT both plunged 11%. Volume was huge and it felt almost like a capitulatory selloff. But those usually come after an extended selloff. Because the three largest semis held in there (NVDA, TSM, AVGO), losing only between 2.6% and 4.5%, the major semi ETFs (SOXX, SMH) fell only around 5%. While the major indices lost between 0.7% and 1.4%, NYSE breadth was only slightly negative at -157, as the selling was concentrated in Information Technology, Energy, Healthcare, and Industrials. In addition, NYSE advancing volume/declining volume was neutral at 50%. (Mark Arbeter, CMT)

There is an interesting technical dynamic occurring that could have implications for many markets. The type of technical analysis is called intermarket analysis, made famous by John Murphy, CMT. The markets include the U.S. Dollar Index (USD), gold and silver, emerging markets, and Bitcoin. While the price charts of these markets are always the most-important barometer -- and some of the assets are stretched to the upside (metals) and the downside (greenback) -- the Commitment of Traders (COT) data lines up very well with reversals in the markets. The dollar is negatively correlated to a high degree with all the above assets. Using COT data over many decades has allowed us to make many non-consensus and reversal calls. But it can also be very frustrating because the smart-money commercial hedgers can be very early when accumulating a falling asset, and also early when selling a rising asset. In recent history, their timing toward the greenback has been very good. For instance, hedgers were bullish in early 2021 and in mid-2023, and were bearish in late 2021/early 2022, in October 2023, and in June 2024. At the same time, large speculators (hedge funds) did the opposite, and each time, it was quite effective to follow the hedgers. The COT data just turned bullish on the dollar, this as the USD is oversold, testing chart support near 100, and with sentiment that is crashing. At the same time, gold (especially) is very extended, the COT data is terrible, and sentiment is very bullish. Indeed, the ebb and flow of the financial markets never stops. (Mark Arbeter, CMT)