Folks,
Market Observations for the Week: The SPX roared back on Friday as impressive Ukrainian resistance prevented the capture of Kyiv. The SPX may continue to trade on Ukrainian war fortunes and hopes for a favorable diplomatic solution. On Sunday evening, the E-mini is down ~100 pts on satellite photos of a 3-mile-long Russian armored convoy heading to Kyiv and Putin rattling his nuclear saber. 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 early Monday. 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 bottomed early Thursday and is correcting an “impulse wave” Sunday night which is bullish for the SPX. Crude oil gave us a 3-wave correction to test $90 Friday but spiked again to test $99 Sunday night in a B-Wave. Gold tested $1976.5 before pulling back in 5-waves to test $1879 Thursday evening and then rebounding to $1935 Sunday night. Gold appeared to top on “peak uncertainty” as the Russians invaded and then started a correction. If the SPX pulls back into Monday/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.
2/27/22 (Commentary for Sunday) The SPX gave us a EW 5-wave rally into Friday’s close and is correcting into the 55-day Fibonacci step out from Jan 4. Our idea for a “symmetry correction” to SPX 3980 on Monday looks wrong but we are expecting some kind of trading low on Monday/Tuesday. We are holding ~80% cash here and ~ 20% in physical gold/silver/platinum and PM equities. A SPX pullback into Monday 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 correcting an impulsive rally into the weekend on Sunday evening which is bullish for the SPX. Crude oil spiked to test $99 Sunday evening as Putin raised his nuclear alert and a 3-mile-long Russian armored column approaches Kyiv. After dropping $100 into Thursday evening, gold bounced back to $1935 Sunday evening on the Russian escalation. Overall, we hold ~80% cash and 20% in gold/silver/platinum in various forms. A pullback in the SPX and the NDX into Monday will see us adding some AAPL and MSFT shares for a trade higher 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 bonds spiked to a weekly high at 156’28 Sunday evening on the Russian escalation. The USD rallied to test 97.46 Sunday evening as Russia rattled its nuclear sabre.
Big Picture on Stocks (UPDATED) – We undercut the key SPX 4222 level Wednesday which confirmed a “bear market” in the SPX. 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, 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 – Led by AAPL and MSFT, the NDX reversed huge losses early Thursday to close strong on Friday. We are holding ~80% cash but plan to add a few AAPL, MSFT and FCX shares on a pullback into Monday.
- Gold – Gold tested $1976.5 early Thursday on the Russian invasion and then dropped a fast $100 before bouncing to test $1935 on Sunday evening. 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 tested 156’28 Sunday evening on a global flight to quality.
- Crude Oil – Crude oil retested $100 Sunday evening on Russian escalation.
- Dollar Index – The USD tested 97.46 Sunday evening on a global flight of capital to the US buck.
TURNING POINT DAY
The turn window for this week is 3/2-3/3.
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