Folks,
Market Observations for the Week: The SPX declined into our 4/14-4/18 turn window which includes the 4/16 Full Moon and the 34-day Fibonacci step out from the 3/14 low. Will the SPX continue down into Monday which is part of the Full Moon Timing Window or will we reverse higher? On Friday, the SPX sold off into the 3-day holiday weekend – the highest 10-yr US rate of the year at 2.835% contributed to the pressure on tech stocks on Friday. We believe that the SPX traded into a “bull trap” last week and we look for more downside on Monday. 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 Thursday. 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 large USD increase in the price of gold in the second half of 2022. As we approached the 4/16 Full Moon, crude oil ramped higher to its R2 resistance pivot at $107.64 on Friday. Gold rallied into the Full Moon Timing Window and Mars Ingress on Thursday and then started to roll over. The USD rallied to 100.76 on Thursday, the high for the year, as the 10-yr US rate made its high at 2.835%.
4/17/22 (Commentary for Sunday) The SPX was held up last week by “peak inflation” hopes after hot CPI and PPI numbers but the rise in the 10-yr US rate to highs for the year at 2.835% late Thursday began to challenge that idea. The NYSE market breadth tested multi-week highs at +2250 early Tuesday and +2000 mid-day Wednesday, and those early “rallies of hope” faded on Thursday. From overnight Monday to Wednesday’s close, the E-mini traced out a sideways EW a-b-c correction that is getting undercut overnight Sunday. Bitcoin also looks weak Sunday night and that could argue for a down SPX open early Monday. 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 bounced into the 4/16 Full Moon and rallied to test $108 Sunday night. Gold only declined in 3-waves to $1963 on Thursday but bounced back smartly to test $1993 on Sunday night – will the 3-star critical reversal day on 4/15 may come in as a high? Bonds continued to fall to 140’08 Sunday night and that argues for a 10-yr US rate above 2.835%. The USD is testing highs for the week near 100.7 Sunday night and looks to go higher early Monday.
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 gave us just a sideways 3-wave correction last week – 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 gave us a 3-wave decline on Thursday but is bouncing back to test $1993 Sunday night. More rally into the 4/14-4/18 Full Moon Timing Window could give us an important short-term high.
- Stocks – The spike in the 10-yr US rate to highs for the year at 2.835% on Thursday cast doubt on the “peak inflation” mantra of many traders going into the 3-day holiday weekend. After an EW 5-waves down on the hourly from 3/29 to 4/11, the E-mini just gave us an EW a-b-c sideways correction into Wednesday’s close – the move down in the E-mini to undercut last week’s low validates this count. 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 – After just a 3-wave correction into Thursday to test $1963, gold rebounded Sunday night to test $1993. Gold could make an important short-term high going into the 4/14-4/18 Full Moon Timing Window.
- Silver – Silver spiked to $26.21 overnight Sunday and could higher highs into Monday.
- Bonds – Bonds are making lower lows Sunday night at 140’08 and we could see the 10-yr US rate above 2.835% early Monday.
- Crude Oil – Crude oil is testing multi-week highs at $108 in the 4/15-4/18 Full Moon Timing Window.
- Dollar Index – The USD is testing highs for the week at 100.76 Sunday night and could go higher early Monday.
TURNING POINT DAY
The turn window for this week is the 4/15-4/18 Full Moon Timing Window.
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