Folks,
Market Observations for the Week: The big down day on Friday sets the SPX up for a gap-down open early Monday and a potential mini-crash. Last fall we argued that the 34-yr Fibonacci step out from the great Crash of 1987 would usher in a fierce bear market that could take the SPX down to test the Covid lows (-2400) by early 2023. The NYSE composite peaked in early Nov 2021 and the NDX peaked in Nov 2021 – that validates our market timing. We did expect that “spiking US rates” in October 2021 could usher in a potential crash in the fall of 2021 – that did not happen because the Chinese led credit contraction gave a “flight to quality” in US Treasury bonds and kept US Treasury rates low. However, US Treasury rates are now spiking and that sets the stage for a potential minicrash on Monday. With the USD at a multi-year weekly closing high above 101, how the Chinese Yuan/USD and Japanese Yen/USD exchange rate trades Sunday night could be crucial to US Treasury bonds – if the Chinese cheapen their currency against the USD Sunday night, that could cause US Treasury rates to spike. The relief rally in US bonds that started Wednesday looked corrective and may be over – higher rates could further pressure US stocks early Monday.
4/24/22 (Commentary for Sunday) The SPX continued its free fall from Thursday and appears to be in a 3rd wave down from the 3/29 high at SPX 4627. The big down day on Friday argues for a “gap-down” open on Monday and/or a mini-crash. The relief rally in bonds from Wednesday looks corrective and may reverse down by Monday’s open. Bitcoin is heading down Sunday evening and that is a negative tell for the market early Monday. Our current holdings are ~80% cash and ~ 20% in physical gold/silver/platinum and PM equities. Friday we sold our TLT shares and added a one stock market hedge before the close. The 10-yr US bond rate climbed consolidated on Friday below 2.94% and bonds are rallying to the R1 resistance pivot at 140’29 Sunday night. Crude oil is falling Sunday night to test its S2 pivot support at $99.21. Gold is falling Sunday night to test important support at $1921 – the seasonal trend for gold is to decline into the 4/26 Comex Gold Option expiration. The USD is consolidating near its Friday high of 101.33 Sunday night.
Big Picture on Stocks (UPDATED) – The SPX gave us a hard day down on Friday and is setting up for a “gap-down” open on Monday’s open or a mini-crash. The SPX confirmed a 3rd wave down from the 3/29 high which is bearish and may be looking to test $4162 this week.
Big Picture on PMs (UPDATED) – Gold made a monthly close at $1942 on 3/31, so both the monthly and quarterly charts look bullish. However, gold is falling to test $1920 Sunday night which is key support.
- Stocks – The SPX had a hard down day on Friday and is setting up for a gap-down open on Monday which could yield a minicrash. On Thursday the SPX confirmed a 3rd wave down from the 3/29 high which projects to test 4162 this week.
- Gold – Gold is falling to test key support at $1920 Sunday night – seasonality has gold down into the 4/26 Comex gold option expiration.
- Silver – Silver is undercutting $24 Sunday and typically trends down into the Comex option expiration on 4/26.
- Bonds – The 10-yr US rate consolidated below 2.94% on Friday – bond prices are taking out Friday’s high Sunday night but the rally looks corrective.
- Crude Oil – Crude oil is testing its S2 support pivot at $98.92 Sunday night.
- Dollar Index – The USD is consolidating near Friday’s high at 101.33 overnight Sunday.
TURNING POINT DAY
The turn window for this week is the 4/25-4/26 time window.
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