Equity markets confirmed the downtrend last week forming a Dark Cloud Cover on the weekly charts of most major indices. The Dark Cloud Cover is an ominous signal akin to an Outside Day and it points to lower prices for the S&P 500. The fact this signal occurs below key resistances such as the 150-day moving average, the top of a channel, and at a previous low only makes it stronger. The index may hover at current levels for the next week or two but, without a change in the economic winds, a move lower is all but assured.

There are two major hurdles for the market this week and the first is election day. The election will bring a change to the outlook, for better or worse, and it could alter the trajectory of the stock market. The other hurdle is the CPI reading for October. This is the 1st of 4 major inflation readings before the next FOMC meeting and will absolutely have an impact on the outlook for inflation, interest rate hikes, and the odds of a major recession in 2023.