Folks,
Market Observations for the Week: The latest attempt in Congress to piece together a stimulus bill for hard-pressed Americans goosed the stock market higher late in the day and the SPX was able to get slightly above our target of 3680 before declining into the close. However, the Option Premium Ratio has now given us the first back-to-back readings (in the .20s) since 2/13/20 – right before the Feb/March crash and that argues that we are close to an important high. With all the good news priced into stocks, we are raising some cash and looking for at least a 8-10% pullback into 12/21. Crude oil is giving us a 5th wave higher from the $37.06 low and we have a target in the $48-$49 range. Gold continues to bullishly sub-divide higher and we made highs for the week at $1848.03 overnight Thursday. The USD tested 90.50 Thursday morning – this is giving a boost to the PM sector.
12/03/20 (Commentary for Thursday) On the back of the latest stimulus rumor, the SPX made it slightly above our target of 3680 to 3682.73 before reversing down into the close. We have turned defensive, raised more cash, and added some VXX for a hedge. The market is drunk with euphoria and we are printing the lowest Option Premium Ratio readings since right before the major high on 2/21– this reinforces the sell signal that we got on Tuesday. However, we still need 5-waves down on the E-mini hourly chart for confirmation. Friday’s NFP jobs report will be a catalyst for the market as some negative expectations are being built in. Crude reversed higher early Wednesday and is now targeting the $48-$49 range in a 5th wave higher. Gold continues to sub-divide higher after the plunge into the Full Moon which was a major intermediate cycle low – we tested $1848 late Thursday. The USD fell to 90.51 early Thursday on talk of potential near-term stimulus - this is bullish for the PM sector.
Big Picture on Stocks (UPDATED) – The SPX continues to test our 3680 target in a diagonal 5th wave that is close to termination – we are now in defensive mode and raising cash – we could see a 8-10% correction going into 12/21. We added some VXX shares.
Big Picture on PMs (UPDATED) – Gold tested $1767 on the Full Moon/lunar eclipse on Monday and made an important intermediate cycle low. We are holding GLD and SLV here and looking to buy NEM and GOLD on dips.
- Stocks –We NYSE Advance/Decline made another new high for the year, but the SPX continues to test our SPX 3680 target in a diagonal 5th wave that is close to termination. We are raising cash and adding some VXX shares for a hedge. We have SELL SIGNALS on our Option Premium Ratio similar to the ones we got before the important 2/21/20 high. The NFP jobs report should be an important market catalyst early Friday.
- Gold – Gold made an important intermediate cycle low on the Full Moon/lunar eclipse and continues to sub-divide higher. Gold has a tendency to decline into the NFP jobs report before a reversal. We like GLD, NEM and GOLD on dips.
- Silver – Silver continues to rally impulsively from the Full Moon low – this is bullish – we plan to add more SLV shares on dips. SIL (silver stocks) looks bullish and silver stocks should be bought on dips.
- Bonds – Bonds finished an EW 5-wave decline on Wednesday and we got hit on a stink bid for some TLT calls. The rally in bonds and TLT may have more legs here – we are still holding TLT calls.
- Crude Oil – Crude oil continues to rally from the Tuesday low and is targeting $48-$49 in a 5th wave.
- Dollar Index – The USD fell to lows of the year at 90.51 this morning on rumors of a near-term stimulus package. This is a bullish catalyst for the PM sector.
TURNING POINT DAY
The turn windows for this week is 11/30-12/1 and the 12/4 NFP jobs report.
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