Higher for longer? Probably, but only for stocks

On Thursday, the stock market experienced a vigorous surge, with the S&P 500 and the Dow Jones Industrial Average building on the upward momentum established by the Nasdaq's uptrend confirmation the day before. Each index surpassed previous resistance levels, with the Dow Jones approaching significant benchmarks as the yields on Treasury notes saw a decline.

The breadth of the market was notably improved, with several of the standout performers being stocks that had previously been trading beneath their 200-day moving averages.

A cluster of companies signaled bullish opportunities on Thursday, including pharmaceutical giant Eli Lilly, oilfield service firm Weatherford, cybersecurity leader Palo Alto Networks, data analytics firm Palantir Technologies, athletic apparel company Lululemon Athletica, and luxury car manufacturer Ferrari.

After hours, Apple Inc.'s stock took a downturn. Despite Apple's earnings exceeding expectations, there was a consecutive decline in sales, and the tech behemoth provided a cautious revenue forecast for the upcoming holiday quarter.

Bouncing towards the upper channel

NASDAQ 100 stopped again at the lower channel trend line and reversed course. It may now have completed the a-b-c-d-e correction pattern we have advocated for quite a while. For this to be confirmed, a break above the upper trend line channel is needed. The trendline broadly coincides with the 50-day MA.

It is always possible that there is an extension to the current corrective pattern. In this case, the latest move down must be relabelled - wave c - and the recent move up may be wave d. But this is unlikely to me, given seasonality and a few other technical patterns.

Given all the political uncertainties (it is Friday again) and the fact that the stock markets have been up for four days now, I expect them to decline or consolidate today. However, job data out before the market opens may lead to a different scenario and push the market higher. This may even lead to a break-out attempt above the consolidation trend channel.

R3K

The R3K may have completed its overall downtrend and may move up until the end of the year.

According to the textbook, such a countertrend move would travel deeply into previous wave 4 territory but stop below the lows of wave 1. for the R3K ETF, which is the 250 level.

R2K is exhibiting a bear market, bouncing

The R2K has completed a five-wave corrective pattern, too. The overall trend is negative.

I see the first wave of a new bear market leg as complete and the market entering a wave 2 upward correction until the end of the year.

Bonds are close to a pivot.

Long-term bonds are in the process of breaking the downward channel. A weekly close above the upper trend line is needed to confirm the break-out to the upside.

Today's unemployment report may be the ultimate catalyst for the bond market to turn. A corrective wave up may carry the TLT ETF close to the top of wave 4, which is at 110 USD.

This would fit nicely with a slowing economy but no recession macro scenario.

A more in-depth update will follow over the weekend.