Market Observations for the Coming Week: Our premise is that the SPX blowing off into the New Moon/solar eclipse timing window on 2/27-2/28 or the potent geo-cosmic timing window on 3/3-3/6 - we are holding QQQ and IWM calls for a spike higher after Trump's State of the Union Address and maybe into 3/6.
2/28/17 (Commentary for Tuesday) The DJIA broke its 12-day winning streak today but the soaring put/call ratios and $TRIN in advance of Trump's speech tonight argue for at least a bounce early Wednesday and there may be higher highs going into the potent 3/3-3/6 geo-cosmic turn window. Our tactic is to buy SPY and QQQ calls on dips here until the market gives us a solid reversal signal (an EW 5-waves down on the hourly SPX) or a break of the "zero line" on the 15-period simple moving average on the hourly $TICK. 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 oil stocks, gold stocks and biotech shares on any downside volatility going into 3/3-3/6. Gold tested $1265 on Monday before reversing lower to touch $1241 Tuesday night and the GDX gave us a 5th wave down on the hourly chart to 22.63 after hours - we are expecting a low in the GDX by 3/3 or 3/6. The relative underperformance in gold stocks compared to gold (see GDX/GLD ratio) came home to roost today, but we may be close to a low in the PM sector. The Dollar Index appears to be coiling in a bearish triangle as we approach Trump's State of the Union address on Tuesday night.
- 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 stocks were smashed today in the 2/27-2/28 turn window. We're looking for an important low by the 3/3-3/6 turn window.
- Stocks - The SPX pulled back today in advance of Trump's State of the Union Address and we bought SPY, IWM and QQQ calls - we're looking for a rally early Wednesday. The bullish Chicago PMI number (57) and the high consumer confidence reading (114) show that "animal spirits" are thriving in the economy.
- Gold - Gold pulled back in a Wave C of an EW a-b-c correction on the hourly chart and the GDX made a 5th wave low after hours - we think the PM sector is close to a low.
- Silver – Silver just gave us an EW a-b-c correction after peaking in the New Moon/solar eclipse turn window - this is bullish.
- Crude Oil - Oil is coiling for a run above $55 - we still hold call options in CVX, SLB and COP.
- Bonds - US bonds appear to be in an impulse wave down.
- Dollar Index – The Dollar Index is coiling in a triangle on the hourly that could break out either way after Trump's State of the Union Address.
TURNING POINT DAY
The turn windows for this week are 2/26-2/27(New Moon/solar eclipse) and the potent geo-cosmic turn window 3/3-3/6.