Folks,
Market Observations for the Week: The SPX gave us a high range correction on Monday and the stock indexes ended mixed. The SPX should continue to trade on Ukrainian war fortunes and hopes for a favorable diplomatic solution but the ADP jobs report on Wednesday and the NFP jobs report on Friday will be important looks at the strength of the US economy. From our latest EW point of view, the E-mini rallied in 5-waves from early Thursday into Friday’s close and is correcting that “impulse wave” into Monday/Tuesday. We may have seen the SPX make a B-Wave test of the 1/24 low at 4222 and we may have started a C-Wave higher to test 4595. Just a 3-wave correction into Monday/Tuesday, could have us nibbling on a few shares of MSFT and AAPL. Bitcoin really rallied Monday as is testing 44000 Monday evening – is this the result of sanctions on the Russian banking system? After just a 3-wave pullback into Friday, crude oil is holding at its Person’s pivot at 96.5 Monday evening which is bullish. Gold is wedging out in its corrective pattern but is holding around $1908 Monday night. If the SPX continues to pull back into Tuesday, we plan to put some of our ~80% cash to work on a trading position in AAPL and MSFT shares. We also have a 20% allocation to gold/silver/platinum in various forms. The USD is testing 97.46 Sunday evening on the escalation of tensions in the Ukraine.
2/28/22 (Commentary for Monday) The SPX only gave us a shallow sideways correction on Monday and may want to hold up into the 3/2 New Moon. We were looking for more SPX correction into Monday but the SPX may be waiting on more news from the Ukraine. We are holding ~80% cash here and ~ 20% in physical gold/silver/platinum and PM equities. A SPX pullback into Tuesday will get us long a few shares of AAPL and MSFT if we get good setups for a trade into the March 2-3 New Moon. Bitcoin is rallying strong and testing 44000 Monday evening which is bullish for the SPX. After a 3-wave correction into Friday, crude oil is holding up at $96.5 Monday evening after Putin raised his nuclear alert and a very long Russian armored column approaches Kyiv. After dropping $100 into Thursday evening and testing $1880, gold bounced back to $1935 Sunday evening and continues to trace out a wedge into Monday evening. Overall, we hold ~80% cash and 20% in gold/silver/platinum in various forms. A pullback in the SPX into Tuesday will see us adding some AAPL and MSFT shares for a trade higher into the March 2-3 New Moon Window. We will still maintain ~70% cash as the macro risks of being 100% long are just too high with the global credit contraction led by China still progressing and a more hawkish FOMC targeting inflation. The US economy is highly levered to widespread speculation in stocks, stock options and digital currencies and trading profits may be difficult this year. In the US, the background monetary conditions have been deteriorating for months and (see the Closed End Fund (CEF) bond sector A/D line) and the Fed’s tightening will accelerate this. The US bond is making a multi-week high at 157’08 Monday evening on the anticipated Russian escalation in the Ukraine. The USD is bouncing to test 96.88 Monday evening, its Person’s Pivot, as Russia moves to escalate around the city of Kyiv.
Big Picture on Stocks (UPDATED) – The NDX gave us a 5% turn-around day on Thursday which only happened before in bear markets. We are holding about 80% cash in our stock accounts and ~20% in gold/silver/platinum in various forms. We are looking for a short-term trading low on Monday/Tuesday, the 55-day Fibonacci step out from the Jan 4 high.
Big Picture on PMs (UPDATED) – Gold tested $1975.6 early Thursday and dropped a quick $100 before rebounding to $1935 Sunday evening. A close above $1960 is needed to confirm that a major rally is underway.
- Stocks – The SPX gave us a rather shallow EW a-b-c correction on Monday as strong Russian forces approach Kyiv. We are holding ~80% cash but plan to add a few AAPL, MSFT and FCX shares on a pullback into Tuesday.
- Gold – Gold tested $1935 early Sunday evening and then started a wedge pattern into late Monday. A close above $1960 is needed to confirm a substantial rally higher is underway. We still hold about 20% in PM assets.
- Silver – Silver bounced Sunday evening on the Russian escalation and Putin’s nuclear sabre rattling – a pullback into the 3/2-3/3 New Moon Timing Window would be ideal.
- Bonds – Bonds tagged 157’08 Monday evening as the Russian main force approaches Kyiv.
- Crude Oil – Crude oil only pulled back in 3-waves into Friday and is holding at its Person’s Pivot at $96.5 Monday evening.
- Dollar Index – The USD tested 97.85 Monday evening on a global flight of capital to the US buck.
TURNING POINT DAY
The turn windows for this week are 3/2-3/3, the New Moon Timing Window, and 3/4, the NFP jobs report.
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