Folks,
Market Observations for the Week: Bad economic numbers (like GDP and continuing jobless claims) plus upsetting rhetoric from Trump about delaying the November elections gave stocks a weak open Thursday, but the NDX managed to close the day positive and the overnight NQ futures soared on good earnings from AAPL, AMZN, FB, and GOOGL. How we trade early Friday will be a test of the stock market's ability to extend the market gains into early August. Gold continued its consolidation from early Tuesday but caught a bid late Thursday on the USD's decline below 93.
7/30/20 (Commentary for Thursday) Predictably bad economic numbers, a big drop in oil, and more "shock rhetoric" from Trump gave us a weak SPX open, but the indices rallied into the close and good earnings from AAPL, AMZN, FB and GOOGL augur for a strong start early Friday. How we trade on Friday (after earnings reports from XOM and CVX) will be a test of the SPX's ability to test our target of 3500 into August. Our thought about the economic recovery stocks (oils, banks, and materials) leading the SPX above 3500 into August is still alive (the financials are showing strength) but we need a strong showing from the oil sector on Friday to get the SPX going higher. Crude oil fell hard early Thursday but still has a chance to spike into Monday's Full Moon and the earnings reports from XOM and CVX early Friday will be key. Silver continued its decline from late Wednesday and tested $23 before rebounding into Thursday evening– we may have finished an EW a-b-c decline. The USD is trading below 93 Thursday night. If the USD closes below 93 on Friday, this will ignite another leg up in gold and silver. Gold is making another test of the $2000 level on Thursday night – we are still holding some GLD calls. Silver is being driven by a strong "reversion to mean" gold/silver ratio trade. The USD is fueling the PM rally by its confirmed downtrend.
Big Picture on Stocks (UPDATED) – The SPX price action from the high of January 2018 to the low of March 2020 was a large Running B-Wave correction in Elliott Wave parlance – we are currently in a final 5th wave higher that should end the bull market from March 2009 and reach 3500+. The SPX may have finished a "running B-wave" correction on 7/24 and turned up early Monday for a rally to test SPX 3500 in August.
Big Picture on PMs (UPDATED) – Gold tested major resistance at $2000 Wednesday night and silver tested major resistance at $26 on Tuesday night. Gold and silver are close to becoming momentum plays for day traders. The weakening USD is building a head of steam in gold and silver which should be bought on dips.
- Stocks –Good earnings from AAPL, AMZN, FB and GOOGL should give us a strong open on Friday – how we trade after the open (and earnings from XOM and CVX) will be key to the chances of extending the SPX rally into August.
- Gold – Gold is testing $2000 again Thursday night as the USD trades below 93 – a close Friday below 93 could ignite another leg higher in gold and silver. The DSI sentiment numbers on gold and silver look toppy in the short term and that is a warning.
- Silver – Silver may have bottomed an EW a-b-c correction at $23 Thursday. A weakening USD is lighting a fire under silver – a USD close below 93 could really ignite the PM sector.
- Bonds – As the USD falls below 93 Thursday night, bonds are soaring to test 183.
- Crude Oil - Crude oil was sold hard early Thursday but could still spike into Monday's Full Moon – earnings from XOM and CVX are key early Friday.
- Dollar Index – The USD is very oversold but can not sustain a rally – a close below 93 on Friday will be an inflationary signal to US markets.
TURNING POINT DAY
The turn window for this week is 7/27.