Folks,
Market Observations for the Week: After a strong post-FOMC market close on Wednesday, the E-mini made an all-time divergent high pre-market at 4743.25. However, the SPX and NDX failed to make new highs and rolled over led by the tech stocks as the Bank of England raised its key interest rate. Will the important 12/18-12/20 Full Moon Timing Window + Venus retrograde be a market high or low – our bias is still for a market low on 12/20. On Saturday, we saw an impressive alignment of Uranus, the Moon, Jupiter, Saturn, Neptune and Venus and this could signal that a major top is at hand. Chairman Powell has raised inflation to his number one priority and our gut is telling us that the Fed will be forced to raise rates sooner rather than later. We remain in 50% cash because of the macro factors facing the global economy (Chinese credit contraction, rising global inflation, and rising global rates, new Covid variant, etc.) and now a more aggressive Fed that wants to rein in inflation. Crude oil is still holding up here and energy stocks got a bid today. After testing 50000 Wednesday, Bitcoin rolled over again and looks weak. Gold continued its rally and tested $1800 and this time the GDX started to lead after the GDX/GLD ratio tested its 9/29 low. Gold made a 20-day cycle low on Wednesday. The USD continues to sub-divide down here and should give us an undercut low below 95.85 – the Bank of England raised rates and that should help rally the British pound against the US buck.
12/16/21 (Commentary for Thursday) The SPX made a B-Wave test of the 11/22 high at 4743.83 but then reversed down as the tech sector got hit. Our bias is that the 12/18-12/20 turn window will be a low. The SPX reversal down today in 5-waves on the hourly and that looks like the start of a C-Wave down with a symmetry target below the 12/1 low at 4495 by the 12/18-12/20 turn window. The big range days over the last two weeks in the NDX and SPX are indicative of a topping bull market – the “planetary alignment that clustered on both sides of the Moon” into Saturday argued that an important top was made on 12/10. Chairman Powell doubled the taper and put the market on notice for three rate hikes in 2022 on Wednesday, but it was the Bank of England raising rates this morning that started the slam down in tech stocks. The US Fed is definitely behind the curve on interest rates and the tech sector know this. Historically, when the Fed has drained liquidity from the financial markets via cuts in bond purchases, big moves down have started in the stock market since 2008. After testing 50000 yesterday, Bitcoin rolled over again today and looks weak – this is a bearish sign for the stock market. The trendlines from the Covid low on 3/23 turned back the last speculative highs in TSLA, Bitcoin, and the IWM near the 11/4 New Moon and continue to remain as stiff resistance. We still hold 50% cash as we feel that the macro risks of being 100% long are just too great with the global credit contraction led by China still progressing and a now more aggressive Fed targeting inflation. Another scary signal came from recent news that the down payments of 20% of first home buyers came from Bitcoin profits – the US economy is highly-levered to widespread speculation in stocks, stock options and digital currencies. Gold made a 20-day cycle low Wednesday and then proceeded to test $1800 Thursday as the USD got hit. In the US, the background monetary conditions have been deteriorating for months and the Fed quickened the reduction of financial liquidity from the US stock market at this week’s Fed meeting despite slowing global growth concerns. The USD spiked to 96.90 after the FOMC minutes before pulling back into Thursday night and testing 95.84.
Big Picture on Stocks (UPDATED) – Today, the SPX made a B-Wave test of the 11/22 high at 4743 before reversing down impulsively. We may see a symmetry correction which undercuts the 12/1 low at 4495 by 12/20. The Russell 2000 gave us an EW 5-wave decline on the daily chart into Wednesday which is a bear market signal.
Big Picture on PMs (UPDATED) – Gold bottomed its 20-day cycle low at $1753 Wednesday and then cleared $1800 late Thursday– we could see a strong bounce above $1800 into late December.
- Stocks – The SPX made a B-Wave test of the 11/22 high at 4743 early Thursday and then started to reverse down impulsively – more down is likely into Monday.
- Gold – Gold bottomed its 20-day cycle low at 1753 and then reversed up above $1800 by Thursday evening– we’re looking for a strong bounce into late December.
- Silver – Silver double-bottomed at $21.41 on Wednesday before reversing up above $22.50 Thursday night.
- Bonds – Bonds bounced today as the 10-yr US rate pulled back to 1.42%.
- Crude Oil – Crude oil continued to hold up today and the XLE stocks got a bid. Uranium stocks were especially strong early Thursday.
- Dollar Index –The USD spiked to 96.90 after the Fed minutes but then fell to test 95.85 Thursday evening.
TURNING POINT DAY
The turn windows for this week is 12/13 and 12/15.
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