Folks,
Market Observations for the Week: The SPX and the DJIA rolled past the New Moon Timing window and made all-time highs which argues for more melt up into the 4/23 high-energy turn window. The Retail Sales report came in much stronger than expected at 9.8%, and instead of soaring higher, long rates came down hard as the bond shorts covered. Falling long rates especially hit BAC hard because of its leverage to long rates. Bitcoin continued its correction and COIN actually closed lower than Wednesday. The market appears awfully extended to us on many technical indicators, and we still believe in holding 25% cash. Crude oil is testing $64 Thursday night – another bullish sign for the market. Gold closed above $1754 and the PM sector may have started full rally mode. The USD continues to roll over impulsively and this is helping the PM sector.
4/15/21 (Commentary for Thursday) A big beat on the Retail Sales report gave the SPX a gap-up open and we roared higher into the close as long rates dropped. Bitcoin did not trade well today, but the SPX and DJIA made new highs past the New Moon Timing Window and that argues that the melt up should continue into at least the 4/23 turn window. A lot of longer-term “market-breath indicators” are very extended at this point and the DSI readings from the major stock indices are on the extremely bullish end of the scale and ripe for a trend reversal -but perhaps not until next week. In our opinion, we are getting close to a tradeable high for stocks. For the SPX, the 55-wk Fibonacci step out from the 3/23/2020 crash low falls this week and it could bring a reversal down by next week’s high-energy 4/23 turn window. A spike here in the 10-yr rate is less likely now that the DSI bullish bond sentiment was only about 2% last week - ultra-low bullishness – and we are looking for long rates to correct in the near term before spiking much higher in the summer when inflation numbers really start rocking. Crude oil is extending its post-New Moon breakout to test $64 Thursday night and this should help oil stocks make a run early Friday. Good bank earnings from BAC and C got sold into this morning as long rates dropped from the open. The energy, banking and materials sectors remain our favorite investment vehicles going forward and deserve allocation from investors on pullbacks into late April – we especially like the pullback in uranium stocks (CCJ, UUUU, UEC, DNN, etc.) lately which will give nice setups in the near term. Gold closed above $1754 which is bullish and gold stocks continue to outperform the metal which is a big positive. The USD is declining impulsively on the hourly chart and that should help the PM sector.
Big Picture on Stocks (UPDATED) – The 55-week Fibonacci step out from the 3/23/2020 crash low falls this week and could usher in a “tradeable high in stocks” by next week. We like the XLE, XLF, and XLB ETFs on pullbacks into late April.
Big Picture on PMs (UPDATED) – The 55-wk Fibonacci step out from the 3/23/2020 low fell this week and gave us a reversal higher in gold after the New Moon Timing Window. The 34-day Fibonacci step out from the 3/8 low gave us a low early Tuesday. Sentiment is terrible in the PM sector and it appears that we may have already made a correction low on 3/8.
- Stocks – The SPX and the DJIA powered to new all-time highs on Thursday and that argues that the trend is higher into next week’s 4/23 turn window. Maintaining a 25% cash level here makes sense to buy potential pullbacks in the XLE, XLF and XLB sectors.
- Gold – Gold closed above $1754 which is bullish and gold stocks continue to lead the way which is very positive. We are holding GLD.
- Silver – Silver tested $26 today and the SIL and SILJ continue to lead the way – we are holding SLV.
- Bonds – The DSI bullish bond sentiment was only 2% last week and that has us looking for a bounce in bonds and a consolidation for long rates.
- Crude Oil – Crude oil extended its breakout higher to test $64 post-New Moon and looks to go higher – the XLE should get a pop early Friday.
- Dollar Index –The USD is declining impulsively and that is starting to support the PM sector.
TURNING POINT DAY
The turn window for this week is 4/12, the New Moon Timing Window.