Jay Powell speaks at a Q&A event on Tuesday, and the FOMC minutes are scheduled for Wednesday, serving us two big Fed events this week. Could Jay Powell use this week as a trial and comment that substantial progress has been made, indicating that tapering is coming? Yes, it would be the perfect time for him to make such a comment because if the market reacts unfavorably, he could easily walk back those comments at Jackson Hole or soften the tone.

Additionally, some information in the minutes may give clues as to the size of a taper or what the timing of the taper could look like. So while many are expecting things to heat up next week at Jackson Hole, we may get a preview this week.

Yields

Bond yields fell sharply when consumer sentiment appeared weaker than expected, keeping the downtrend in rates alive. Following the stronger PPI reading, the 10-year rallied to resistance and the trend line around 1.38%. 

But the breakout was avoided, and as I have been saying for months, the general trend in rates remains lower, and one needs to wonder what message the bond market is sending that the equity market is missing. It seems possible the 10-year may continue to head lower and push back down to 1.18%.

Nasdaq 100 (QQQ)

Last week I noted the QQQ from an Elliott Wave and Fibonacci perspective was well-positioned for a pullback. Based on Friday’s close, those Fibs and wave counts are still working, leaving the ETF in a strong position for a sharp pullback here.

S&P 500 (SPY)

This week we can add the S&P 500 ETF (SPY) to that list. The Fibs and Elliott Wave counts are rather stunning when we compile all of the points that suggest the recent highs make a nearly perfect match for a topping pattern. First, a potential ABC count makes waves A and C equal when starting with the Sept. 24 low.

Next is a 5 wave count that starts off the Oct. 30 low, with an extended wave 5 count of 1.618% of wave 3, while wave 3 is equal to wave 1.

You can combine this with a strong count off the March 2020 low, making a strong case that this the end of the rally.

You can also combine the 5 wave count off the March 2020 low with the ABC pattern mentioned off the September lows.

So like the Qs, it is possible to consider that the S&P 500 is well-positioned for a pullback here and if these levels hold as resistance around 4,460, and it seems highly likely that this may happen, then we could have a candidate for a turn down. Right or wrong, we will find out this week.

Amazon (AMZN)

Amazon managed to hang on to support this week at $3,300, but it still has a gap to fill down around the $3,200 level, and given the weakness in the stock, I think that the lower gap will get filled, with the stock continuing to push lower. The 200-day moving average is holding as support, but I don’t think that will last much longer.

Moderna (MRNA)

Moderna’s gamma squeeze popped this week as we expected. The stock, for now, is using the uptrend as support, but there was a lot of damage to the momentum indicators this week that suggest the declines are not finished yet.

The RSI uptrend is broken and the MACD has turned negative, which are all signs of broken momentum. So is the unwind complete? Probably not, with the $350 level looking to be the best place for support for now.

Roku (ROKU)

Roku continued its decline this week, and for now, it is finding support at the 200-day moving average. This moving average has served as support in the past, but I’m not certain how much longer it will continue to do so.

The stock is very overvalued, and the company doesn’t have the growth rate to maintain that valuation. There is nothing wrong with the company, the stock is just way overvalued. A drop below $290 confirms the double top pattern is in place, and the stock should face a long and steep decline at that point.

General Motors (GM)

GM hasn’t finished falling yet either, with clear downward momentum on the RSI and MACD. The $49 price level I pointed out months ago is coming. Better later than never, I guess.

Cisco (CSCO)

Cisco reports this week, and I need this to get to $57.25, which comes to within 2% of my $58.40 level. I’d prefer it to happen before they report because we all know that Cisco almost always beats on the top and bottom lines and then gives guidance below expectations, sending the stock lower. The stock is well-positioned to get to that $57.25 level, but it is really cutting it much closer than I’d like.