Weak Knees

Watching the market overnight and it’s drifting back up. I don’t put much stock in the overnight moves because they frequently reverse, but I’m not bearish short-term if the market goes to a new rally high. The bull trap scenarios I laid out will be in play if the market cracks 3900 and goes for 4000 or 4100.

Apple and Amazon earnings will be huge tomorrow after the bell, followed by the PCE report for Q3 before the open on Friday. Harking back to those bull traps, the Cleveland Fed has the September PCE numbers coming in lower than expected. That will be crack for bulls if Amazon and Apple can merely avoid a “Meta” scenario with their earnings reports. Bulls will not care if October inflation numbers are worse and a weak dollar lifts the inflation rate. They'll enjoy a few days of rampage before the Federal Reserve drops the hammer on November 2.

Best case for bears who have shorted already is that Apple, Amazon or both disappoint and Cleveland Fed is wrong about the PCE. If not, one of the bullish trap scenarios is the best outcome.