Interesting pause here at support.  If a model I’m watching plays out, next week could be ugly.  On the other hand…think of all the times we’ve seen a meltup during a low-volume holiday week.

There are a few tells, as long as they’re not head-fakes.  We’ll start with USDJPY, which has done absolutely nothing to support stocks lately.  It’s clearly headed for 112.71.  If it were to drop through to the SMA100 or SMA200, we could see some ugly fallout.Then, there are all the FAANG stocks – each one of which is either in trouble or about to be.

First, GOOGL recently broke down from a 10-year rising wedge.Yesterday, it experienced a death cross… …the first one since June 2016.  Being GOOGL, it bottomed the very next day.

continued for members…

My apologies for the delay…family matters.  Ok, let’s run through the rest of the FAANGs.

FB just broke down today below the purple TL from Mar 2016.  This, after its second death cross back on Sep 19.More concerning, it broke below the white channel midline that dates back to 2012.  If it can’t find support at one of the Fib levels nearby, it has potential all the way down at the 2.618 at 89.41.If COMP is headed for 6730, this would equate to 129.74, right near FB’s 1.272 at 130.09.  So, we’ll call this the most likely next target.

The same 6.56% decline in AMZN would put it around 1483.  AMZN has already been lower than that, reaching 1476 on Oct 30 before it bounced back above its SMA200.  I still think the 4.236 Fib at 1421.29 could come into play.  But, the wedge top (now bottom) also makes perfect sense.  Without a good, specific target, I’d say take your cues from COMP and SPX.  When they need a reversal, it’s likely AMZN will likely help lead the way. We’ve discussed AAPL a lot lately.  The big problem is if its red channel from 2016 breaks down. AAPL has already reentered its rising purple channel.  To its credit, AAPL is hanging in there just above its 2.24 Fib at 190.43.  AAPL has never been shy about propping up its own stock — especially when the shares were in danger of a breakdown.

I suspect they’ve spent a lot of the hundreds of billions in the coffer the past few days.  If 190.43 breaks down, the next serious support isn’t until 175ish, followed by the 1.618 at 162.39.Netflix is one of those stocks I’ve never really believed in.  I sat next to one of the founders — might have been Reed, can’t remember — at a Sundance screening in 2004 during my hiatus from the investment business.  He excitedly told me about his budding company.

I thought it was a stupid idea that would have a very hard time unseating BlockBuster.  I smugly watched the stock tumble from 5.30 to 1.32 over the next year, confident that I was right.

Obviously, I couldn’t have been more wrong.  Even $10,000 in NFLX at 5.30 would have been worth $798,500 at its peak earlier this year.

TOS can’t even chart it properly… …until I zoom in on it.NFLX has tumbled 35% since its 423.21 high in June.  It nearly tagged our .618/271.91 target on Oct 29, bounced up to its midline, and is likely on its way to its .786 at 230.77 — another 19% or so.The company has obviously proven itself in many ways.  But, I have big reservations about its spending on original content.  Making successful TV and movies is awfully hard. I can’t see that they’ll earn that money back, let alone turn a big profit on it.  We’ll see.

That’s it for the FAANGs.  Some might hold their current prices, and others are susceptible to big drops.  As a class, they’ve all benefited from buybacks, excessive exuberance, low interest rates, and FOMO.  If COMP can contain its losses to 6.6% at 6730, they’ll be okay.  If it dips 14$%to 6227, then most of them will suffer right along with it.Stay tuned.

 *  *  *

Our yield curve model indicates this is a pause as occurred between 3/15-3/21.The dollar could see new pressure from both the yen……and the euro.  Oil and gas are doing most of the propping up these past few days, but have only backtested so far. This leaves ES off about 20 points, which would leave SPX still above its 2.24 support. VIX, still playing its cards close to the vest.As I mentioned earlier this week, I intend to take Thanksgiving week off.  This will probably mean a brief update first thing in the morning on Monday, Tuesday and perhaps Wednesday.  But, we’ll see how things go.

I wish everyone safe travels and an enjoyable holiday.