Folks,
Market Observations for the Week: The SPX peaked at 4575.65 at the end of trading Monday above the 0.618 retracement at 4455 and we may have seen a pattern completion of the EW 5-wave rally from 3/16. The SPX gave us a 3-wave in the morning session but rallied hard into the close. The SPX completed an EW 5-wave rally into today’s close into today’s 3/29 turn window and printed another TRIN-5 SELL SIGNAL. A selling wave into 3/30-3/31 is still possible but every SPX decline gets bought and not even Biden’s “regime change” remark kicked off any pullback during his press conference today. On our last TRIN-5 sell signal on 2/9, the SPX gave us a 226-point decline in the following three trading days and something similar could happen this week. The SPX rallied through the “panic day” on 3/25 and closed handily above the .618 retracement level at SPX 4546. Could we start a C-Wave down here that could undercut SPX 4176 (our EW alt count) or just a corrective pullback that back tests the downtrend line from 1/04/2022 in a rally up to ~5100? Overnight strength in Bitcoin paved the way for a positive move in the SPX on Monday. We are now in 80% cash and 20% PM holdings today as we lightened up on our GLD and SLV holdings. Crude oil fell hard to test $102.83 as China shutdown Shanghai in its battle on Covid. Gold fell hard on Monday and barely made a daily close above $1920. The USD broke above its rising wedge and tested 99.37 before a pullback.
3/28/22 (Commentary for Monday) After an early 3-wave correction, the SPX roared into the close and finished well above the 0.618 retracement at 4575.67. Stocks made new rally highs today but on negative NYSE breadth. Our TRIN-5 indicator gave us another SELL SIGNAL on Monday and we still consider it a possibility of a wicked decline into Wednesday/Thursday but the market remains resilient against Biden’s “regime change” remarks and rising rates. The SPX continues to rally under extremely overbought conditions and looks frothy with “meme stocks”, pot stocks, and other speculative issues getting a bid. The AAII investment survey saw a large swing from last Thursday as the Bearish % dropped 15% to 35.4% and the Bullish % rose to test highs for 2022 at 32.8%. Our Option Premium Ratio mimicked the AAII survey and dropped from 2.04 on 3/16 to 0.50 on 3/23 which shows a cycling from “extreme fear” to “bullish giddiness”. Our current holdings are ~80% cash and ~ 20% in physical gold/silver/platinum and PM equities but we have owned APPL and FCX at times from the 3/14 low. We have seen an incredible run by AAPL – far higher and far quicker than expected – we are suspicious of this rally and have seen similar performances in other bear markets. The fundamentals of this market are not stock friendly here – 1) we have a Fed that has lost its credibility on forecasting and containing inflation, 2) a crude oil price that more than doubled in the past 12 months and 3) a yield curve that is close to inverting – a recession by Q4 is likely. Crude oil tested $102 and may have finished an EW a-b-c correction on the hourly chart – the news of the Shanghai shutdown hit the energy markets hard. A strong USD hit gold hard today and it dipped down to test $1915 before magically closing the day above $1920. Gold’s monthly seasonality is to decline into the 4/1 NFP jobs report. Bonds declined to lower lows at 146’10 overnight Sunday before bouncing on Monday. Higher rates helped the USD test 99.4 today.
Big Picture on Stocks (UPDATED) – The SPX moved to rally highs on Monday at 4575.67 – it is possible that its 3-star critical reversal day landed on 3/28 as a HIGH.
Big Picture on PMs (UPDATED) – Gold only made it to $1967 last Thursday (our symmetry target was $1980) and then fell hard into early Monday. Monthly seasonality has gold declining into Friday’s NFP report.
- Stocks – From 3/14, the SPX may have completed a 5-wave rally to 4575.67 on Monday above the .618 retracement. We got another TRIN-5 SELL signal on Monday’s close and could see a correction start on Tuesday.
- Gold – Gold made a weekly close above $1952 but fell hard to test $1915 late Monday before closing above $1920. Weakness into Friday’s NFP report is the usual drill.
- Silver – Silver tested $26.20 Thursday but pulled back to under $25 late Monday.
- Bonds – Bonds undercut Friday’s low to 146’10 Sunday night but we bounced on Monday.
- Crude Oil – Crude oil got slammed down to test $103 on the Shanghai shutdown news but it may have finished an EW a-b-c decline on the hourly chart.
- Dollar Index – The USD rallied to test 99.4 on Monday and pressured the PM sector.
TURNING POINT DAY
The turn windows for this week are 3/28, and the NFP jobs report on 4/1.
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