Folks,
Market Observations for the Week: One of my favorite ways of measuring market psychology is Jake Bernstein’s Daily Sentiment Index report or DSI for short. Our bear horns are starting to grow after seeing Monday’s DSI bullish sentiment numbers for various global stock index futures – S&P 90, Nasdaq 85, Nikkei 90 – we are close to a tradeable top. We still looking for a stock run up into the 4/11-4/12 New Moon Timing Window before a reversal down next week that could run into the 4/23 high-energy geo-cosmic turn window. Crude oil is in a wedge as we approach the New Moon – our bias is that we are setting up for a spike higher into the 4/11 New Moon. Gold tested $1746.7 Tuesday and started a sideways correction – our bias is that gold will hold up into the New Moon – a close above $1754 will turn us bullish. The USD appears to be declining impulsively which could benefit the PM sector.
4/07/21 (Commentary for Wednesday) We’re still looking for a stock run up into the 4/11-4/12 New Moon Timing Window and then a stock correction into the 4/23 high-energy geo-cosmic turn window. A lot of “market-breath indicators” are very extended at this point and the DSI readings from Monday for the S&P, Nasdaq and Nikkei futures are on the extremely bullish end of the scale and ripe for a trend reversal – we are close to a tradeable high. For the SPX, the 55-wk Fibonacci step out from the 3/23/2020 crash low falls next week and looks like a reversal down. A spike here in the 10-yr rate is less likely now that the DSI bullish bond sentiment is only about 2% - we are now looking for long rates to consolidate in the near term and perhaps spike much higher in the summer when inflation numbers start rocking. With long rates in a potential sideways consolidation, the NDX could bounce up into the 4/11-4/12 New Moon Timing Window but this move could just be a B-Wave that will be followed down after the New Moon by a C-Wave that could undercut QQQ 297. Crude oil is wedging sideways into the weekend but we favor a spike higher into the 4/11 New Moon before another turn down. The energy, banking and materials sectors remain our favorite investment vehicles going forward and deserve allocation from investors on pullbacks. Gold looks like it wants to make a run higher into the New Moon – a close above $1754 will turn us bullish. We may have already made a correction low on 3/8 and double-tested it on 3/31 – keep your eyes on the gold sector. The USD appears to be declining impulsively and that could give the PM sector a boost.
Big Picture on Stocks (UPDATED) – The 55-week Fibonacci step out from the 3/23/202o crash low falls next week and could usher in a “reversal down”. We could be close to a tradeable high in the SPX. We like the XLE, XLF, and XLB ETFs on pullbacks in the SPX into late April.
Big Picture on PMs (UPDATED) – The 55-wk Fibonacci step out from the 3/23/2020 low falls next week and could give us a reversal higher. Sentiment is terrible in the PM sector and we expect a major low in the first half of April.
- Stocks – The SPX and the NDX continue to hold up into the weekend New Moon, but we are looking for a tradeable high soon. Monday’s VIX DSI reading came it at just 9% which argues for big volatility soon. We sold some AAPL calls today. Maintaining a 25% cash level makes sense here.
- Gold – Gold tested $1746.7 Tuesday before rolling into a sideways corrective pattern. A close above $1754 would turn us bullish – we are holding some GOLD and NEM calls.
- Silver – Silver closed above the 200-dma Tuesday and gave us 5-waves up on the hourly chart – that is bullish. SIL and SILJ are leading silver higher which is bullish. A weakening USD could give silver a nice bounce into 4/11-4/12.
- Bonds – The DSI bullish bond sentiment is only 2% and that has us looking for a bounce in bonds and a consolidation for long rates.
- Crude Oil – Crude oil is tracing out a “wedge pattern” into the weekend – our bias is for a spike above $63 into the 4/11-4/12 New Moon.
- Dollar Index –The USD is declining impulsively and that could support the PM sector.
TURNING POINT DAY
The turn window for this week is 4/5-4/6.
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