Folks,
Market Observations for the Week: The SPX continued its rally today despite back-to-back TRIN-5 SELL SIGNALS and this argues for a continued blow off into the 4/1 New Moon. Today the SPX closed at 4631.60 and above the 4600-resistance line that turned back both the 2/2 and 2/9 rallies that also had a TRIN-5 SELL SIGNAL. Unlike yesterday, the NYSE ADV/DEC line closed strong at +2103 which is bullish. Since tomorrow is the 34-day Fibonacci step out from the 2/24 SPX low at 4118, a pullback into 3/30-3/31 is still possible – some traders are hedging for this by adding UVXY. Our bias for tomorrow is that any pullback will be a 4th wave type correction that will resolve higher by 4/1. Bitcoin is trying to decline overnight but has bounced to its Person’s Pivot at 47720. Crude oil declined early to 98.44 but bounced back overnight to $104.72. Gold fell hard early Tuesday and undercut the Fed Day low of $1895 before bouncing back into the close and impressively closing above $1920. The USD is close to a 5-wave down decline Tuesday night on the hourly chart and is testing 98.
3/29/22 (Commentary for Tuesday) Despite multiple TRIN-5 sell signals, the SPX continued its rally and closed above 4600 with strong market breadth into the close. However, tomorrow we have the 34-day Fibonacci step out from the 2/24 SPX low and we could see a pullback into 3/30-3/31 before a resumption of the rally on 4/1. The SPX most likely will continue its blowoff into the 4/1 New Moon. 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 trading shares of 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 2-yr/10-yr yield curve that inverted on Tuesday – a recession by Q4 is likely. Crude oil declined in 5-waves and tested $98 early on the Shanghai shutdown before rebounding to test $102 overnight. Gold undercut the Fed Day low at $1895 before roaring back to once again close above $1920 at the end of the day session. Gold’s monthly seasonality is to decline into the 4/1 NFP jobs report. Bonds rallied today as the 10-yr US rate corrected. The USD tested 98 early in the session and appears to be declining impulsively.
Big Picture on Stocks (UPDATED) – The SPX continued its rally on Tuesday and closed above 4600 which is bullish – it is possible that its 3-star critical reversal day landed on 3/14 as a low. Tomorrow’s 34-day Fibonacci step out from 2/24 could give the SPX a correction.
Big Picture on PMs (UPDATED) – Gold’s 3-star critical reversal day came in as a HIGH on 3/24 and gave us a C-Wave down that undercut the Fed Day low at $1895 this morning. Monthly seasonality has gold declining into Friday’s NFP report.
- Stocks – The SPX defied multiple TRIN-5 SELL SIGNALS and rallied to close above SPX 4600 resistance. The 34-day Fibonacci step out from 2/24 could kick off a pullback into 3/31.
- Gold – In hindsight, gold’s 3-star critical reversal day came in as a HIGH on 3/24 and kicked off a C-Wave down into this morning’s low at $1893. Once again gold was able to make a daily close above $1920. Weakness into Friday’s NFP report is the usual drill.
- Silver – Silver tested $26.20 Thursday but pulled back to test $24 early Tuesday.
- Bonds – Bonds undercut Friday’s low to 146’10 Sunday night but continued to rebound into Tuesday.
- Crude Oil – Crude oil made a 5-wave decline to $98 early Tuesday but rebounded to test $102 overnight.
- Dollar Index – The USD rolled over to test 98 early Tuesday and is threatening to give us a 5-wave down pattern on the hourly chart.
TURNING POINT DAY
The turn windows for this week are 3/30, and the NFP jobs report on 4/1.
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