Folks,
Market Observations for the Week: The SPX followed up its Friday reversal with a solid rally day on Monday. Our bias was that the 55-day Fibonacci step out from 3/29 would end the first wave down of the 2022 Bear Market and it appears to have come in a few hours early on Friday’s expiration day. The SPX tested the .382 retracement of the post-Covid rally from 3/23 at SPX 3810 on Friday and that appears to be a trading low. We may have started a bear market rally that could test SPX 4200 by Fri – seven down weeks in a row for the DJIA needs an upside correction. Tuesday is a turning point day in our work. If we get just a 3-wave corrective pullback to SPX 3910, we might buy a few shares of AAPL for a bounce into the holiday weekend. Bitcoin is rolling over after hours and will give us a negative bias early Tuesday for the SPX. The bond market continues to consolidate sideways from Thursday. Crude oil gave us EW 5-waves down on the hourly chart last week and just a 3-wave bounce so far which looks weak. For the USD, we got a 5-wave decline below 103.194 which is also a SELL SIGNAL and just a weak bounce – both the Yen and Euro are poised to move higher.
5/23/22 (Commentary for Monday) The 55-day Fibonacci step out low evidently fell on late Friday for the SPX and we may have made a trading low on Friday. The SPX gave us 5-waves up from Friday with an ending diagonal today into the close. Led by Bitcoin, the E-Mini is moving down overnight and the SPX could test 3910 early Tuesday – just a 3-wave correction into tomorrow’s turn window would get us to buy a few AAPL trading shares for a run into the holiday weekend. Bitcoin is rolling over to test 28777 overnight and that is a negative tell for the SPX on Tuesday’s open. Monday was the 55-day Fibonacci step out from the important high on 3/29 and we may have seen the low for the first leg down in the 2022/2023 Bear Market on expiration Friday. Crude oil gave us a 5-wave decline on the hourly chart last week and just a 3-wave bounce so far which is BEARISH, and the USD gave us 5-waves down on the hourly chart for a SELL SIGNAL which is bullish for the Yen and Euro. Our current holdings are ~80% cash and ~ 20% in physical gold/silver/platinum and PM equities – we also hold some FXY (Yen) shares.
Big Picture on Stocks (UPDATED) – We may have seen the end of the first leg down in the 2022-2023 Bear Market on Friday. The SPX could give us a 20%-50% correction by spring 2023 as the 20-yr cycle low hits and the US economy slows to a recession. We favor a high percentage of cash for capital preservation.
Big Picture on PMs (UPDATED) – Gold is close to an intermediate cycle low that should bottom by the 5/25 Comex Gold Expiration if it didn’t already at $1785 early Monday.
- Stocks – Our bias is for a SPX low on Monday/Tuesday that could be scary followed by a strong reversal into the holiday weekend.
- Gold – As the Mars ingress approaches on Tuesday, gold made a high at $1864 early Monday and could now correct into the 5/24-5/25 Comex gold option expiration. We may have seen the gold ICL at $1785 on 5/16.
- Silver – Silver tested $22.20 early Monday and should now correct into Comex option expiration on 5/24-5/25.
- Bonds – Bonds have been correcting sideways since Thursday.
- Crude Oil – Crude oil fell in 5-waves on the hourly with just a 3-wave bounce which looks short-term bearish. The XLE is too far above its 200-dma to buy on dips here for us.
- Dollar Index – The USD gave us an EW 5-wave decline on its hourly chart for a SELL SIGNAL – the Yen and Euro are poised for a run higher.
TURNING POINT DAY
The turn window for the next week is 5/24.
Comments