Folks,
Market Observations for the Week: We expected some volatility for the stock indices on the New Moon today, but it was a quiet day. The NDX and SPX could still give us a leg down on Thursday to finish their consolidation from last Friday. We are sticking with bank plays (BAC) and energy plays (XOM, CCJ) this week – bank earnings on Friday will be closely watched. Crude oil tested $54 Tuesday night and then gave us a quick 3-wave correction into Wednesday – another leg up to $55 is possible. Gold had a quiet day session but is reversing down overnight – gold still has the potential to test $1800 by Thursday. The USD could still see a “wave c” higher on Thursday that could test 91.5 and pressure the PM sector.
1/13/21 (Commentary for Wednesday) Bitcoin continued in correction mode on Wednesday – the speculative fervor may be breaking. The IWM is historically overextended from its 200-dma but still managed a new all-time high going into the 1/12-1/13 New Moon Timing Window. The SPX and NDX corrected into the New Moon and look to make a leg down on Thursday. With some of the stock indices closing above their daily Bollinger Band curve and their RSI-5 above 90, we are DEFENSIVE going into the second trading week of 2021. With stock indices this extended, selling “call options” against stock positions and raising cash makes sense to us. We think that the 1/12-1/13 New Moon Timing Window + some of the most powerful geo-cosmic aspects of the year has the potential to make important turns in several markets – stocks, gold, and crude oil. The bank, energy, and materials sectors remain our favorite and deserve allocation from investors on market dips. Many commodity markets have reversed to “bull market advances” and will be fed by a steady stream of newly created US dollars. The Russell 2000(IWM) led the Q4 rally stock rally, but divergence from its RSI and MACD oscillators continue to telegraph a potential turn down in January. We remain on the defensive and raised cash as the SPX finished 5-waves up on the hourly chart from 12/21 low into 1/8 – just a corrective pullback into the 1/12-1/13 New Moon Timing Window would be bullish, however, and this overextended market could ratchet even higher. Despite our defensive posture, we continue to day-trade XOM, BAC and SLV options if we get good setups – risking just a small portion of our cash position. Gold traced out a corrective pattern into the New Moon – a test of $1800 is possible into Thursday. The USD looks poised to make a “wave c” higher of an EW a-b-c correction into Thursday.
Big Picture on Stocks (UPDATED) –The SPX continued to power to new all-time highs on 1/8 despite the calls for the quick ouster of President Trump. We are DEFENSIVE this week, however, and believe that the 1/12-1/13 New Moon Timing Window has a chance of making an important turn in the stock indices. It is prudent to be defensive and hold some cash.
Big Picture on PMs (UPDATED) – A typical pullback into the NFP jobs report turned into a rout on Friday. Gold made a weekly close below the 50-dma and 200-dma which is a SELL SIGNAL for several funds. We could see a test of $1800 into Thursday.
- Stocks – The SPX made 5-waves up from 12/21 into 1/8 – if so, just a corrective pullback into the 1/13-1/14 New Moon Timing Window would be bullish. We are still being defensive and only trading small amounts of capital in favored stocks like BAC, XOM and SLV.
- Gold –We are looking for more selling into Thursday by institutions and a test of $1800 is possible.
- Silver – Silver rallied to a 5-wave top last week and tested $28 – we are looking for a 3-wave pullback into Thursday which should be bought.
- Bonds – Bonds rallied after another good bond auction, but the rally looks corrective. Long rates may continue their way higher.
- Crude Oil – Crude oil spiked to test $54 Tuesday night and then made a quick 3-wave pullback into Wednesday’s New Moon – a test of $55 is still possible into Thursday.
- Dollar Index – The USD could make a “wave c” higher on Thursday with a target of 91.45.
TURNING POINT DAY
The turn window for this week is 1/12-1/13, the New Moon Timing Window.
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