Market Observations for the Coming Week: The DJIA topped a B-Wave test of the highs on Tuesday's open and fell in a C-Wave that is still sub-dividing down into Thursday's close - we view this as a bull market correction that has more to run. The market needs to re-balance sentiment going into 2017.
12/29/16 (Commentary for Thursday) The DJIA peaked a B-Wave test of the highs at Tuesday's open in the New Moon Timing Window and we began a Wave C down of an EW a-b-c pullback that should run further down on Friday. Just a small correction in the stock market could yield a sizable bounce in the VIX as we move into January and volatility is extremely oversold. Bonds broke upwards in what appears to us as a C-Wave of a large EW a-b-c upside correction that has more to run - for the moment we are refraining from shorting bonds though we still consider a fast move to 3.0% on the US 10-year bond a potentially destabilizing possibility for stocks going into January. The GDX gave us a dynamic rally Thursday after the passing of the New Moon - we view this as very bullish. The IBB (biotech) continued its C-Wave down on the hourly into Thursday - the chart still looks weak to us but we still like CELG on dips. The Dollar Index finished a B-Wave test of the recent highs at 103.625 and then reversed down in a C-Wave that is continuing into Thursday evening - this looks short-term bullish for gold.
- Big Picture on Stocks (UPDATED) - The DJIA just gave us a B-Wave test of the highs from last week and started a C-Wave down that should continue into Friday.
- Big Picture on PMs (UPDATED) - The GDX traded sideways into the New Moon Timing Window on Wednesday and then rallied hard today - this is BULLISH. Record low sentiment for gold argues that this rally could be the start of something big into 2017.
- Stocks - The DJIA finished a B-Wave on the open and started a C-Wave down that should continue into Friday.
- Gold - The GDX went sideways into the New Moon Timing Window and then rallied hard Thursday - we're looking for gold to catch up. Record low bullish sentiment argues that a major low has been made.
- Silver – Silver stocks are rallying hard and leading the whole PM sector higher - we're looking for a catch up move by silver.
- Crude Oil - Crude oil rallied into Wednesday's New Moon and then reversed down late in the session - crude oil is falling in a C-Wave down.
- 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. A fast move higher in rates in January could threaten "the stock market party". Bonds continue to sub-divide higher in a C-Wave - short-term bullish.
- Dollar Index – The USD just gave us a B-Wave test of 103.625 before reversing down in a C-Wave on the hourly that is still sub-dividing down - this is bullish for gold.
TURNING POINT DAY
The New Moon on 12/28 may give the DJIA another run at 20,000.