Market Observations for the Week: The SPX made a new all-time early last week and then started a correction into our 7/17-7/20 seasonal turn window. We are looking for weakness early Monday before another bounce attempt. Crude oil failed to bounce higher after the 7/16 Full Moon/lunar eclipse and may be confirming a downtrend. Confusion about a Fed official's remarks last week saw gold pulling back $30 on Friday but we remain short-term bullish.
7/21/19 (Commentary for Sunday) The SPX made a high early last week at 3017.18 before starting a correction. The market indices held up despite weak breadth numbers, but we are concerned how the market sold into good earnings from MSFT. The weakness of crude oil and energy stocks also weighed heavy on stocks. The market correction could extend into early Monday before another bounce attempt. After a mid-July correction, we still have our target of SPX 3100 by August/September – we DO expect the large sideways SPX consolidation pattern from January 2018 to be DECISIVELY taken out this summer before we roll over for a fall correction. Global markets are all about liquidity here and we have long predicted that the Fed will shift back to an easing stance(set to start on 7/31) - a crisis in the European banking system would evoke a quick easing or QE response from the US Fed. Crude oil's bounce from Thursday looks corrective and the trend looks down – the energy sector has weighed heavy on the stock market. Gold and silver showed extreme volatility on Thursday/Friday but the GDX held up well on gold's $30 decline on Friday – we remain short-term bullish on gold and silver and a quick move to $1500 is still possible. The USD bounced back hard on Friday and even spiked higher than Thursday's range.
- Big Picture on Stocks (UPDATED) - The SPX tested 3024 early Monday and finished 5-waves up on the hourly chart. We are getting close to an important summer high by the 7/31 New Moon and Fed rate cut day.
- Big Picture on PMs (UPDATED) – Gold retraced hard on Friday, but gold stocks remained resilient keeping us bullish in the short term for a run to $1500.
- Stocks – The SPX still appears in correction mode going into Monday and we are cautious with the weakness in market breadth.
- Gold – Gold and silver showed some intense volatility on Thursday/Friday but the GDX/GLD ratio remained resilient – we are still bullish for quick test of $1500.
- Silver – We saw "big prints in SLV in the Dark Pool" last week – this means that silver is moving from "weak hands" to "strong hands" here and should accelerate its move up. Silver closed above $16.20 on Friday and continues to move higher Sunday night.
- Crude Oil - Crude oil failed to bounce significantly after the Full Moon/lunar eclipse last week despite the tensions with Iran – this confirms that the trend is down.
- Bonds - Bonds may still need to finish the B-Wave of an EW a-b-c correction on the hourly chart.
- Dollar Index – The USD rebounded hard on Friday and spiked about Thursday's high.
TURNING POINT DAY
The turn window for this week is 7/22-7/23
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