Market Observations for the Coming Week: The DJIA and Russell 2000 continued to make new highs but the VIX did not make a new low today and that argues for a stock market pullback soon. Rising US rates boosted the USD and pressured gold below $1200 - if gold doesn't reverse higher by Monday, a much deeper correction is in store.
11/23/16 (Commentary for Wednesday) The DJIA and Russell made new highs today but the VIX resisted making new lows today and that portends a possible correction by next week. The bond market made new lows today and that boosted the USD and pressured gold below $1200 - if gold does not reverse higher by Friday and close above $1200, this could be a signal of a deeper correction as we go into December. The pullback in crude oil from Tuesday could also sub-divide down further - we sold our APA and UCO calls and will look to re-enter next week. The IBB (biotech) sold off hard early Wednesday on the back of the Eli Lilly news but we held our call positions in CELG and BIB. Bonds impulsed down to lows of the week and boosted the USD to rally highs and pressured gold below $1200. Gold may have to make one more lower low as we move into early Friday - we need to see gold close above $1200 on Friday or risk a bigger selloff - we added to GLD and gold stock calls today and look for a big reversal higher on Friday. The US Dollar Index spiked to new highs above 101 on Wednesday and this pressured gold and silver to lows for the week.
- Big Picture on Stocks (UPDATED) - The SPX is just giving us shallow pullbacks of the post-election rally - bullish - we plan to buy dips in the IWM and SPY going into 11/25 for new all-time highs. A sell signal in our VIX-sentiment model would turn us short-term cautious.
- Big Picture on PMs (UPDATED) - Gold was crushed below $1200 by a another spike in US long rates. We're looking for a big reversal higher by Friday.
- Stocks - The SPX sold off early on a decline in crude oil but the DJIA and Russell 2000 got to new highs - we're looking to buy dips in FANG, biotech, and energy stocks on Friday.
- Gold - Gold plunged below $1200 on rising US long rates - we added calls on GLD, NUGT, NEM, AEM and SLW. Gold must close above $1200 by Friday or we risk a bigger selloff.
- Silver – The SIL (silver stocks) held up well in today's PM stock carnage - we added calls on SLV and SLW and look for a sharp reversal higher early Friday.
- Crude Oil - Crude oil's pullback from Tuesday may have more to go - we sold our APA and UCO calls.
- Bonds - Bonds made an EW 5-waves down on the daily into October which confirms the start of a bear market and perhaps a generational low in rates. Bonds declined hard early Friday and pressured the USD higher and gold below $1200.
- Dollar Index – The Dollar Index spiked above 101 on Wednesday - we added to our FXY (Yen) calls.
TURNING POINT DAY
The 11/25-11/28 turn window could bring us an important turn in the SPX and GDX.
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