Market Observations for the Coming Week: Our premise is that the SPX blowing off into the New Moon/solar eclipse timing window on 2/26-2/27 or the potent geo-cosmic timing window on 3/3-3/6 - we are holding UVXY call options for a hedge.
2/23/17 (Commentary for Thursday) The SPX made an all-time high on the open Thursday and we sold our SPY and QQQ calls - more blow off is possible going into Monday, but if we just pull back correctively into the 2/26-2/27 New Moon/solar eclipse timing window, this could be bullish for another leg higher into the potent geo-cosmic turn window on 3/3-3/6 - Friday's trading will be interesting. The blow off in "call option buying" after the Full Moon/lunar eclipse, after weeks of high all-exchange put/call ratios, argued for a short-term top last week, but all we got was just a mild 3-wave pullback in the SPX after the 2/14-2/15 turn window and then a new all-time high on 2/21 - this stock market continues to blow off and the 2/26-2/27 New Moon/solar eclipse is our next target in time for an intermediate-term top. Tuesday, we got a SELL SIGNAL on our 5-day MA of the CBOE equity put/call ratio (.57) which came in below .60 - this joins our SELL SIGNAL on our Option Premium Ratio indicator which spiked to a new 52-week low (.52) on 2/14 - this argues for a top in the next few days. We must also note that strong corporate insider sales are also giving us a BEAR signal here and the VIX is refusing to make new lows (bearish divergence). We still plan to buy dips in gold stocks, oil stocks and biotech shares on any downside volatility going into 2/26-2/27. Gold hit $1252 on Thursday and may be running up into the New Moon/solar eclipse timing window around 2/26-2/27 - the weak performance of gold and silver stocks here is a caution, however. For the first time in recent memory, a US Treasury secretary is trying to talk up the Euro - the times are certainly changing. The Dollar Index is sub-dividing down here and boosting gold and silver.
- Big Picture on Stocks (UPDATED) - We're looking for an intermediate-term SPX top by the New Moon/solar eclipse timing window on 2/26-2/27 or the potent 3/3-3/6 geo-cosmic turn window.
- Big Picture on PMs (UPDATED) - Gold and silver broke out today and may be making a run up into the 2/26-2/27 New Moon/solar eclipse but the PM stocks are LAGGING - this is a warning of a trend reversal. The GDX may need another leg down here.
- Stocks - The SPX opened at an all-time high and we sold our SPY and QQQ calls - Friday's tape will be key - we intend to FADE the price action going into the New Moon/solar eclipse on 2/26-2/27.
- Gold - Gold broke out today and tested $1252 but gold stocks lagged - this makes us cautious.
- Silver – Silver appears to be blowing off into the New Moon/solar eclipse but the silver stocks(SIL) is lagging - we could see a reversal down by Monday.
- Crude Oil - Crude oil is making a run up into the New Moon/solar eclipse but oil stocks continue to lag - we hold call options in CVX and COP.
- Bonds - US bonds may have declined in a Wave 2 of C on the hourly on Wednesday - this looks like a bullish coil.
- Dollar Index – The Dollar Index ended a B-Wave test of the 101.75 high Wednesday and rolled over in a C-Wave down on the hourly chart - but a break out above 101.75 will be short-term bearish for the PM sector.
TURNING POINT DAY
The turn windows for this week are 2/21 and 2/24-2/27(New Moon/solar eclipse).