Folks,
Market Observations for the Week: Did we start the year-end rally when the SPX rallied from the 12/20 into the X-mas weekend? Maybe, but the 34-day Fibonacci step out from the 11/22 high lands on 12/26 and that could give us a potential turn window on 12/27. The SPX tested its all-time high on Friday and actually made a closing high, but how we trade on Monday is key. On a bullish note for the SPX last week, Bitcoin rallied up in a EW 5-waves on the hourly chart and closed above the important 50000 level which is bullish for Bitcoin. Crude oil bottomed in the 12/20 Full Moon Timing Window and is rallying impulsively into Sunday night which is a positive for the SPX. 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 – especially after the Bank of England raised their rates this month. 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. Gold bottomed at $1785 on Tuesday and is testing multi-week highs at $1815 Sunday night – a break above $1815 would make us short-term bullish on gold. closing above $70 is bullish for crude oil and the stock market. Bitcoin appears to be coiling under the key 50000 level – a US market close above 50000 would be bullish. After the decline into Tuesday at $1785, gold has bounced back to test $1815 Sunday night – gold and silver have a solar-lunar Big Range Day on Monday. The USD may have finished an EW a-b-c correction today on the 3-wave pullback to retest 96.
12/26/21 (Commentary for Sunday) The SPX tested the all-time high at 4743.83 going into Thursday’s close. How we trade on Monday is key for the year-end trend for stocks. The big range days up and down 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 12/11 argued that an important top was made around 12/10 – the E-mini did make a divergent high on 12/16. Chairman Powell doubled the taper on 12/15 and put the market on notice for three rate hikes in 2022, but the US Fed is clearly behind the Bank of England which raised rates on 12/16. 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. Bitcoin made a weekly close above 50000 which is bullish for bitcoin and the SPX. Crude also rallied 5-waves higher from the 12/20 low which is bullish for the SPX. 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. From the Tuesday low at $1785, gold is testing $1815 Sunday night in a possible B-Wave – the Big Range Day in gold and silver on Monday is predicting volatility. In the US, the background monetary conditions have been deteriorating for months and the Fed has quickened the reduction of financial liquidity from the US stock market at last week’s Fed meeting despite slowing global growth concerns. The USD may have bottomed an EW a-b-c decline Friday which retested 96.
Big Picture on Stocks (UPDATED) – The SPX is in the process of making a historic top and we are living on borrowed time. The Russell 2000 has already given us a bear market signal – an EW 5-waves down on the daily chart. How the SPX trades on Monday will be key because 12/26 was the 34-day Fibonacci step out from the 11/22 high.
Big Picture on PMs (UPDATED) – Gold tested $1785 on Tuesday and has rallied up to test the $1815 high on Sunday night. Monday is a solar-lunar Big Range Day which should bring us some volatility.
- Stocks – The SPX bottomed on its 10-day trading cycle low on 12/20 and continued its rally into Thursday’s close which is close to the key 34-day Fibonacci step-out from the 11/22 SPX high on 12/26. How the SPX trades on 12/27 will determine the trend into year end.
- Gold – Gold tested $1785 on Tuesday and then bounced higher to test $1815 on Sunday night. Monday is solar-lunar Big Range Day which should bring volatility to gold and silver.
- Silver – Silver double-bottomed at $21.41 on 12/15 and is testing $23.00 Sunday evening. Monday should be a volatile day.
- Bonds – Bonds appear close to bottoming an EW a-b-c decline on the daily chart.
- Crude Oil – After bottoming on the Full Moon Window on 12/20, crude oil has roared up impulsively to test $74 on Sunday night – this is bullish for the stock market.
- Dollar Index –The USD may have ended an EW a-b-c correction to retest 96 on Thursday.
TURNING POINT DAY
The turn window for this week is 12/27.
Comments