Market Observations for the Coming Week: Our bias is that the DJIA low of 4/19 was an important low and that the SPX and DJIA are in a run to at least test the highs from 3/1 into May. We should see a test of SPX 2400 before a pullback on tomorrow's New Moon.
4/25/17 (Commentary for Tuesday) The QQQ and SPY continued to gap up into the New Moon early tomorrow and we bought QQQ calls near the open today. We may see the high for the week for the QQQ and SPY tomorrow. Our bias now is to enter stink bids for ABX, SLW, GG and NEM and see if we get hit into the New Moon early Wednesday for a bounce. The SPX is well above its 50-day MA Tuesday and continues to soar into the New Moon early Wednesday. Our bias is that the SPX will test 2400 tomorrow and then pullback. We're still anticipating a May/June correction before a summer rally. We were expecting a sell off after the 4/18 Tax Day and the market rallied instead - BULLISH. This is a big earnings week for many high profile tech companies(XYLN, STX, etc.) and we are expecting good results overall. The GDX took a big hit on Tuesday (-4.4%) as the safety trade was sold off and ABX and NEM reported less than stellar earnings. We're look for a "trading pop" in gold stocks early Wednesday on the exact New Moon but weakness in the GDX/GLD ratio argues for lowers lows in the PM complex going into early May. With a 90% bullish sentiment reading from DSI last week, it looks like gold needs more correction in time into May. The USD continued lower today as the Euro soared higher - this is limiting the pullback in gold.
Big Picture on Stocks (UPDATED) - The DJIA finished an EW a-b-c correction from 3/1 on 4/19 and this has turned us short-term bullish. The DJIA is testing 21,000, the SPX is testing 2400 and the Nasdaq looks comfortable about 6,000. We are looking for a short-term pullback tomorrow on the 4/26 New Moon.
Big Picture on PMs (UPDATED) - Gold's test of $1300 Sunday evening may have put in a weekly high, but the GDX plunge into the New Moon Timing Window on 4/26 should give us a trading bounce.
- Stocks - We sold our QQQ calls near the close and are looking for a short-term pullback to start on tomorrow's New Moon.
- Gold - Gold made a B-Wave test of $1300 on 4/16 and we consider this an important trading high - especially with the very large Spec long position in the Comex gold COTs and the very high DSI bullish sentiment on gold (90%) - we sold our GLD puts early today and are positioned for a trading pop in gold stocks on tomorrow's New Moon.
- Silver – Weak action in the silver stocks(SIL) and record high silver COT speculative longs keeps us cautious and looking for lower lows into May, but we could see a "trading pop" in SLW on tomorrow's New Moon which is exact near the market open.
- Crude Oil - If crude oil spikes down early tomorrow(oil inventory report?), we will try to get filled on a stink bid for SLB calls.
- Bonds - Bonds have fallen in an EW 5-waves down on the hourly into the New Moon - like gold, we are looking for a bounce on Wednesday.
- Dollar Index – The Dollar Index worked lower as the Euro continued its run to our target of 113 - this should limit gold's downside into May.
TURNING POINT DAY
The turn window for this week is 4/25-4/26 which includes the New Moon and the Tuesday after a monthly option expiration.