Folks,
Market Observations for the Week: The NDX and SPX held up well after the hotter than expected year-over-year CPI number of 6.4% and these indices look posed to make new highs by the 12/19-12/20 turn window. However, this week includes a Fed meeting and we should see some consolidation in the SPX going into Wednesday before a final run higher by the NDX and SPX. On 12/19 Venus will go retrograde and that could mark the high SPX print of the year before a sharp correction into January. 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 close at hand. Chairman Powell has raised inflation to his number one priority and the new FOMC committee appear receptive to the idea of a near-term tightening of monetary policy. 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 may have finished just an EW a-b-c bounce and looks weak. Bitcoin is also looking weak here and continues to trade below 50000 which looks bearish for the stock market. Gold tested $1794 early Wednesday but is still holding under $1800 which looks weak to us. The USD continues to consolidate sideways but could rally on a weaker than expected CPI report.
12/12/21 (Commentary for Sunday) The SPX held up after the hot CPI report and could make new highs by the 12/19-12/20 turn window. should determine the short-term trend of the SPX on Friday. The E-mini could make a new high by Monday before a consolidation into Wednesday’s FOMC minutes and Chairman Powell news conference. The big range days over the last two weeks in the NDX and SPX are indicative of a topping bull market – powerful geo-cosmic turning points from mid-December to 12/20 could top this stock market after a final blow off in the SPX and NDX. The “planetary alignment that clustered on both sides of the Moon” into Saturday argue that an important top is close at hand. Chairman Powell said that he will present a “more aggressive tapering plan” to the new FOMC at the December meeting despite back-to-back months of weaker than expected NFP job creation. 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. Bitcoin continues to trade weak and is holding below the key 50000 level – 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 but taking out those barriers would be bullish. 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 may have made a DCL (Daily Cycle Low) at $1762.2 Thursday afternoon but the CPI report early Friday will set the short-term trend. Gold did get to $1794 early 12/8 but could test those highs early Monday before consolidation into Wednesday’s Fed day. Crude oil is rallying to test its R1 pivot at $73.67 Sunday evening but momentum is lagging. Bonds tested 164’12 on 12/3 before declining in an EW 5-waves down into Wednesday to test 160’13 – bonds sold off after a hot CPI report on Friday. In the US, the background monetary conditions have been deteriorating for months but the Fed looks determined to quicken the withdrawal of financial liquidity from the US stock market at the December meeting despite slowing global growth concerns. The USD trended sideways last week, but the hot CPI report should erode the USD and it appears to be rolling over Sunday night.
Big Picture on Stocks (UPDATED) –The SPX could be rallying to retest the all-time high this week – a new high in the 12/19-12/20 turn window could be an important pattern completion. The Russell 2000 and the NYSE Composite have already given us an EW 5-wave decline on the daily charts into 12/1 which is a bear market signal – the Russell 2000 may only have the potential to form a right-hand shoulder.
Big Picture on PMs (UPDATED) – Gold may have finished a DCL (Daily Cycle Low) on 12/2 and gave us a rally to $1794 on early Wednesday. We need to see a bounce over $1800 to verify the DCL.
- Stocks – The CPI came in hotter than expected, but the SPX held up into the close – The E-mini could make new highs on Monday before consolidating into the Fed FOMC minutes on Wednesday afternoon.
- Gold – Gold may have made a DCL (Daily Cycle low) on 12/2 but needs to rally above $1800 to convince us that an important low was made last Thursday. An undercut low below $1758 would be bearish.
- Silver – Silver gave us an undercut low to $21.82 on 12/9 but a wash out this week to $21.50 is possible.
- Bonds – Bonds declined in 5-waves from 164’12 on last week to 160’13 on Wednesday and appears to be rolling over Sunday night.
- Crude Oil – Crude oil bounced to test $73.36 Wednesday, but the rally looked 3-wave corrective and this market is looking to roll over.
- Dollar Index –The USD is rolling over Sunday night after the hot CPI report early Friday.
TURNING POINT DAY
The turn window3 for this week is 12/13 and 12/15.
Comments