Folks,
Market Observations for the Week: The PPI report came in hotter than expected but once again the cries of “peak inflation” drove the market higher into the close. We believe that the SPX is tracing out a “bull trap” here. After an EW 5-waves down from the 3/29 high, the E-mini gave us essentially a “sideways up-down-up” correction from Monday evening into Wednesday’s close which looks bearish to us. Bitcoin has also traced out what appears to be a sideways EW a-b-c correction into Wednesday evening. Overall, our bias is that the 4637 high on 3/29 was an important SECONDARY HIGH for the SPX and that we are now in a C-Wave down to test SPX 4167. We are maintaining our ~80% cash holdings and 20% in the PM sector. We expect the US economy to be in recession by Q4 and the 20-yr stock cycle points to much lower stock prices by the end of 2022/early 2023. We view the US financial war against Russia as highly destabilizing to the global USD hegemony and we could see enormous volatility in the Euro and Yen in April/May and a huge USD increase in the price of gold in the second half of 2022. As we approach the 4/16 Full Moon, crude oil rallied in an EW 5-waves higher from $92.93 on Monday to $104.44 on Wednesday. Gold has surpassed its high made on the 34-day Fibonacci step out from 3/8 on Monday at $1974.6 and that is bullish – we could see higher highs into the 4/14-4/17 Full Moon Timing Window. The USD tested 100.52 pre-market Wednesday and traced out a 5-wave decline to 99.67 into the evening – have we made a short-term top?
4/13/22 (Commentary for Wednesday) The PPI came in hotter than expected but traders once again rallied the SPX into the close on “peak inflation” hopes. The NYSE market breadth tested multi-week highs at +2250 early Tuesday and +2000 mid-day Wednesday. From overnight Monday to Wednesday’s close, the E-mini appears to be tracing out a sideways EW a-b-c correction. Bitcoin also appears to be doing something similar. Our current holdings are ~80% cash and ~ 20% in physical gold/silver/platinum and PM equities. 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 – a US recession by Q4 is likely. Also, the US-led financial war against Russia could lead to blow backs on the Euro, Yen and USD price of gold. Despite the Shanghai shutdown, crude oil is bouncing into the 4/16 Full Moon and got above $104. Gold continues to rally into the 4/14-4/17 Full Moon Timing Window and made highs for the week today at $1985.8 – it appears that the 3-star critical reversal day on 4/15 may come in as a high. Bonds continue to bounce from the 141’06 low pre-market Tuesday as the 10-yr US rate pulls back despite the hot PPI report. The USD made highs for the year at 100.52 early Wednesday but then fell hard impulsively to test its S2 pivot support at 99.615 overnight.
Big Picture on Stocks (UPDATED) – The 34-day Fibonacci step out from 2/24 landed on 3/29 and peaked the bear market rally in the SPX and NDX – the plunge in the DJTA after 3/29 confirms that top as an important high. The SPX declined has declined in 5-waves on the hourly chart from the 3/29 high and has given us just a sideways 3-wave correction – this is Bearish Price Action.
Big Picture on PMs (UPDATED) – Gold made a monthly close at $1942 on 3/31, so both the monthly and quarterly charts look bullish. Gold made a high for the week at $1985.8 today. More rally into the 4/14-4/15 Full Moon Timing Window could give us an important short-term high.
- Stocks – The PPI report came in hot, but traders took the SPX higher again in what appears to be an up-down-up sideways correction from early Tuesday. After an EW 5-waves down on the hourly from 3/29 to 4/11, the E-mini has given us just an EW a-b-c sideways correction into Wednesday’s close – we view this as a “bull trap”. We believe that the bear market rally from 3/14 peaked on 3/29 – the rapid roll over of the DJTA from 3/29 is bearish for both stocks and the US economy.
- Gold – Gold made highs for the week so far today at $1985.8. Gold could make an important short-term high going into the 4/14-4/15 Full Moon Timing Window.
- Silver – Silver spiked to $26.12 overnight Wednesday before correcting – higher highs are possible going into the 4/14-4/17 Full Moon Timing Window.
- Bonds – Bonds tested 141’06 early Tuesday and then bounced into Wednesday taking the 10-yr US rate back to 2.69%.
- Crude Oil – Crude oil rallied above $104 today as it approaches the 4/16 Full Moon.
- Dollar Index – The USD tested 100.52 early Wednesday before an impulsive decline to its S2 support pivot at 96.62 overnight.
TURNING POINT DAY
The turn window for this week is the 4/14-4/16 Full Moon Timing Window.
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