Folks,
Market Observations for the Week: The SPX and the NDX have both taken out the 1/10 lows but the pattern of the QQQ looks close to a completion. One more undercut low below QQQ 365.54 early Thursday would give us 5-waves down from 1/12 and perhaps the end of an EW a-b-c correction from 11/22. The 1/14-1/18 turn window is a 3-star critical reversal window that has already turned gold/silver higher on 1/18 and the USD lower – it may also try to turn the SPY/QQQ higher for a final run into late January. 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 hawkish FOMC that wants to rein in inflation and unwind the Fed balance sheet more aggressively than the market anticipated. Gold and silver made important lows on 1/18 and gold took out the critical $1834 level today to reconfirm its uptrend after silver took out its $23.48. We could now see a quick move up to the $1880 high for gold and $25.50 for silver. Bonds rallied Wednesday and the 10-yr US rate corrected after rallying in 5-waves higher on the daily chart to 1.866%. The USD rolled over today and tested 95.44 which helped support the big move in the PM sector.
1/19/22 (Commentary for Wednesday) The NDX and SPX both took out their 1/10 lows and we may be approaching a pattern completion in the QQQ. One more undercut low below 365.54 early Thursday, would give us 5-waves down from 1/12 and the possible end of an EW a-b-c correction from 11/22. So, our short-term market bias is turning to bullish early Thursday if the QQQ and SPY give us undercut lows in the morning. The PM sector bottomed on 1/18 and we could see a broad market low at 1/20. We favored gold stocks today on the 7% rise in the GDX – we are holding NEM and are looking for a move to $75. Remember, we are still in the orb of the 34-year step out from crash of 1987 and the Russell 2000 high of 11/8 could have been a significant high – even so, the QQQ and SPY could be setting up for one final run up. Bitcoin continues to coil sideways and is hugging its Person’s pivot at 41820 overnight – it is showing bullish divergence to the SPY and QQQ by keeping above its 1/10 low. Our current bias is that the QQQ needs to undercut it’s low at 365.54 to finish 5-waves down and the possible completion of an EW a-b-c correction from 11/22 into 1/20. Crude oil spiked higher to $86.79 and could be putting in a short-term high. 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 hawkish FOMC targeting inflation and Fed balance sheet runoff. The US economy is highly levered to widespread speculation in stocks, stock options and digital currencies and Bitcoin trading profits may be hard to come by in 2022. On its solar/lunar Big Range Day today, gold screamed higher and broke above $1834 to confirm its uptrend. Clearly, gold and silver made an important low on 1/18 which was in the 1/16-1/18 Full Moon Timing Window and on the 34-day Fibonacci step out from 12/15. 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 the December Fed meeting despite slowing global growth concerns. Bonds rallied today and the 10-yr US rate sub-divided down to 1.821%. The USD pulled back to 95.44 which supported the PM sector.
Big Picture on Stocks (UPDATED) – Our short-term market bias changed to bullish late Wednesday on the possibility that one more undercut low early Thursday in the QQQ could end the EW a-b-c correction from 11/22.
Big Picture on PMs (UPDATED) – On gold’s Big Range Day today gold blasted above $1834 resistance and confirmed its uptrend. Gold stocks bullishly led the way higher today.
- Stocks – An undercut low below QQQ 365.54 early Thursday would be a short-term QQQ buy signal for a final run up into next week’s 1/26-1/28 turn window.
- Gold – Gold made an important low at $1805 on Wednesday and today we blasted above $1834 resistance to confirm its uptrend.
- Silver – Silver continued to climb in a 3rd wave higher and looks to target $25.
- Bonds – Bonds rallied hard on Wednesday as the 10-yr US rate dropped to1.821%.
- Crude Oil – Crude oil spiked to $86.79 today and may have formed a short-term top.
- Dollar Index – The USD pulled back today as rates slid and tested 95.44.
TURNING POINT DAY
The turn window for this week is 1/16-1/18, which is the Full Moon Timing Window.
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