A broad-market cycle- likely began in late October with our indicated 'trough or nadir' washout S&P bottom. It's complicated by the broad market which did not get overbought like the mega-caps (and they still are), while stayed in an oversold overall status for months, if not more than a year.

Freepik

That's also 'why' a ridiculous contention of a 'Death Cross' pattern evolving as some hedge fund guys suggested just before yesterday's 'face-ripping rally' of course has them regretting that now. I make the point not to chastise anyone, but to observe that you couldn't (my argument last month) crash the 'already crashed' majority of smaller stocks, but you could (and did) get a break below S&P 4200, which would complete the A-B-C downside pattern, not initiate it.

All this matters as part-and-parcel of the idea of a stair-step advance that now is ongoing, may and should consolidate within reason, with strength prevailing overall (not every hour of every day) into the upcoming Thanksgiving holiday.

Market 'X-ray'

De-esculatory remarks from China's President Xi and similar post-scripted-comments smirk/smile from both set-the-stage for this meeting. Also Xi emphasis on 'Earth big enough for both to succeed' and a negative Xi remark about protectionist tendencies (aimed at the U.S. obviously), sums it up for now. Military de-confliction needs are obvious.

There's little to assess yet about 'Climate Change', the war (unclear whether much was gained from the hospital raid, although the answer likely is 'yes', in terms of intelligence, clarifications, helping the babies, and establishing a key control point in north Gaza), APEC or the talks with China.

Besides the trade and military de-confliction aspects, I think an agreement that curtails shipments of fentanyl to Mexico (where it's process before the smugglers send it North) would be the most important deal they could make.

Meanwhile . . several months ago, I noted that SoundHound (SOUN) planned to get 'financials' right with their new accounting firm, or at least it appeared that way after a period in which I questioned their strategies, how they book revenue, as well as insider selling and use of company funds like a personal ATM. That evoked some ire, and that's ok. It just seemed sketchy. Now they sort of admit it.

After the Close today, SOUN reports a delay in filing their 10Q due to needing their 'new' accounting firm redo statements to (my take) better reflect accurate financials in PREVIOUS reporting periods. I presume that's the old accountant days, and the period I had referred to as 'sketchy'. Even by their subsequent Conference Calls, despite ignoring the earlier 'growing pains', they tried to be more fundamentally correct, so postponing filing to pick-up errors seems adult and in-line with a company planning on greater achievements and clarity. Just minutes later they filed the 10Q and I read it. The CEO takes responsibility as well as realizes market implications if they fail to maintain proper financials.

I don't know how the market takes this, but sort of means they're 'cleaning up their act' which is necessary in becoming a bigger more substantial business. Again changing accountants likely initiated a change in thinking from 'sketchy' to now 'responsible'. If they succeed SOUN will prove to have been a bargain a few weeks ago, even cheap now ... and if SOUN shares sells-off on this it's people that don't understand or see this as a 'plus' that reflects an emergence from 'financial engineering' I thought they engaged in previously, they tried to spin, but turns-out my concerns were valid. Also, they have too many shares issued, but that's another 'issue'. They use shares as their currency it seems (customers sometimes invest 'in' them), and I get that. So if this is behind, so is the low, provided they continue to add clients and 'be real' with financials.

Bottom-line: 

Limited S&P moves today, with only a bit of late squaring is fine. Thursday has little data (weekly Jobs), and maybe news from APEC or China after they face a skeptical American big-business community this evening.

Much of what we saw yesterday was short-covering, but continued skepticism as the S&P works higher is welcomed, it portends higher levels. Breadth is for sure better and that's key, as the attractive values are not in the mega-caps.

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