Market Observations for the Coming Week: A big cluster of Fibonacci time cycles are landing on Friday this week, so more upside is possible into tomorrow. Despite bearish non-confirmation of the NDX all-time high from the SPX and DJIA, the market remains resilient - it wouldn't surprise us to see the market hold up into the Trump Inauguration before a fast and scary pullback on Monday. According to the decennial cycle, the 7th year of a decade is usually quite bullish into July-August where it can find an important reversal.
1/19/17 (Commentary for Thursday) The SPX continued its consolidation pattern and things "feel on hold" until Friday. There's a cluster of Fibonacci time cycles landing into the January 20 inauguration and our gut says that this market could hold up into tomorrow on a "buy the rumor sell the news" play for the incoming administration. We're cautious here and have been raising cash for the pullback that many expect, but we must respect the possibility that this Fibonacci cluster may give way to an upside acceleration in the DJIA. Overall though, we expect a quick, scary pullback by Monday that will test the nerves of bulls but we plan to be flexible on our market in the near term - we remain liquid and agile. Today we added a few SVXY puts and UVXY calls - we expect volatility to increase going into tomorrow. The GDX gave us an EW 5-waves down into Thursday on the hourly chart before a corrective bounce - we're looking for a C-Wave down into the 1/20-1/23 turn window which we plan to buy aggressively. The Dollar Index rallied into Thursday before reversing down - we may be starting the next impulse leg down.
- Big Picture on Stocks (UPDATED) - A slew of Fibonacci time cycles land late this week and into the 1/20 Inauguration - we suspect this market could hold up into Friday before a scary pullback.
- Big Picture on PMs (UPDATED) - Gold spiked higher Tuesday on the latest down leg on the USD - we're looking for a short-term top on 1/18, the 34-day Fibonacci step out from the 12/15 post-Fed rate hike low and then a pullback into the 1/19-1/23 turn window. Recent record low sentiment for gold argues that this rally could be the start of something big in 2017 since so many analysts have discounted that possibility.
- Stocks - The SPX continued to move sideways into Friday's Inauguration as the NDX made another new high. The VIX started breaking out to the upside Thursday and we expect a "sell the news" response to Trump's Inauguration.
- Gold - Gold rallied in 3-waves into Tuesday on the hourly chart - that may have been a "running B-Wave top" - we declined in 5-waves into early Thursday and this could have been an ending C-Wave of a brief correction - Friday's tape will tell us. We believe that gold made a major Wave 2 low on 12/15 on the daily chart, and we plan to buy dips going into the 1/19-1/23 turn window.
- Silver – Silver made a 5th wave high into Wednesday's turn window and pulled back correctively into Thursday. We believe that silver made a major Wave 2 low on 12/15 and we'll be looking to buy dips into the 1/19-1/23 turn window.
- Crude Oil - Crude oil finished an EW a-b-c correction into the Full Moon Timing Window on 1/11-1/12 but only bounced correctively into Tuesday - on Wednesday we started a C-Wave down that looks ongoing - we're still holding WMB calls.
- Bonds - Bonds finished an EW a-b-c correction on the hourly chart Thursday - we added some TLT calls.
- Dollar Index – The Dollar Index may have rallied in 5-waves on the hourly going into Thursday - Friday's tape will be illuminating.
TURNING POINT DAY
We're looking for the 1/19-1/23 turn window to be key for both stocks and gold this week.