Folks,
Market Observations for the Week: The SPX tested 4488 early and then spent the rest of the day correcting – how we trade on Thursday will determine whether the rally from 4/18 is just an EW a-b-c bounce or a more substantial rally. We are expecting big volatility in the SPX tomorrow. The day after a VIX expiration (3rd Wednesday of the month) has given us an average of 105 SPX points in the past three months – two down and one up day. Our bias is for an initial runup to SPX 4500-4510 and then a reversal down. If we get a big up day tomorrow, that will change our short-term bias. Bitcoin may have peaked today at 42295 before it reversed in 5-waves – the bounce overnight Wednesday may be corrective, but it does point to early strength in the SPX on Thursday. The SPX trade on Thursday will determine the short-term market trend and we will adjust accordingly. Traders are convinced that “peak inflation” is behind us and that the coming Fed rate hikes are “already priced into the stock market”. We are maintaining our ~80% cash holdings and 20% in the PM sector – we sold our GOLD and NEM shares today and expect lower prices into Comex gold option expiration next week. 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 large USD increase in the price of gold in the second half of 2022. Crude oil tested its S1 pivot support at $100 and bounced back to $103 overnight. The USD declined in 5-waves into Wednesday and then bounced correctively – this may be a trend change event. The high USD is a headwind for the US multi-national companies.
4/20/22 (Commentary for Wednesday) The SPX made its high for the day at 4488 before correcting sideways into the close. Bitcoin made a high at 42295 before declining in 5-waves down and bouncing overnight. Bitcoin may be starting a decline here and that makes us cautious for Thursday. Some analysts think that Bitcoin reversed higher from a “daily cycle low” early Monday but we need more follow through Thursday to convince us. Our bias for tomorrow is a bounce to SPX 4500-4510 and then a big reversal down. Our current holdings are ~80% cash and ~ 20% in physical gold/silver/platinum and PM equities. If the SPX rally extends above 4510 tomorrow, we will adjust accordingly. Today we sold our NEM and GOLD today as the PM sector may correct more into next week’s Comex gold expiration. Bonds rallied today and sent the 10-yr US bond rate back down to 2.82%. 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. Crude oil declined to test its S1 support pivot at $100 before bouncing back to tag $103 overnight. Gold fell to test $1945 Tuesday evening and then rallied Wednesday to touch its Person’s Pivot at $1961 – the test of $2000 on 4/18 came in as a 3-star critical reversal day. Bonds bounced on Wednesday and sent the 10-yr US rate back down to 2.82%. The USD declined in 5-waves into Wednesday and is bouncing correctively overnight – this may be a trend change event.
Big Picture on Stocks (UPDATED) – The SPX tested 4488 early Wednesday before going sideways into the close – our bias is for a move to 4500-4510 early Thursday before a reversal down. How the SPX trades on Thursday will determine the short-term trend.
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 bounced back from its overnight low at $1945 and tested its Person’s pivot at $1961.
- Stocks – The SPX rallied to test 4488 early today and it looks like a run up to 4500-4510 early Thursday is in the cards before a reversal down.
- Gold – Gold tested $1945 overnight Tuesday and then bounced to tag its Person’s Pivot at $1961 today. The high on Monday at $2003 was the 3-star critical reversal day.
- Silver – Silver tested $26.49 on Monday and fell to test $25 early Wednesday.
- Bonds – Bonds bounced on Wednesday and the 10-yr US rate pulled back to 2.82%.
- Crude Oil – Crude oil fell to test $100 mid-day before rebounding to tag $103 overnight.
- Dollar Index – The USD gave us 5-waves down on the hourly chart and then a corrective bounce – we may be seeing a trend change event.
TURNING POINT DAY
The turn window for this week is the 4/15-4/18 Full Moon Timing Window which includes a 3-star critical reversal day for the SPX and gold.
Comments