Folks,
Market Observations for the Week: The SPX rally from Friday continued on Thursday and ran up to test SPX 4075. The bulls were encouraged when NVDA reversed higher on Thursday after its earnings got sold into pre-market. Our bias is that we made a SPX trading low on 5/20 and after a rally on Monday, the SPX pulled back into Tuesday’s turning point window before reversing higher into Thursday. The SPX tested the .382 retracement of the post-Covid rally from 3/23/20 at SPX 3810 on Friday and that appears to be a trading low that started a bear market rally that could test SPX 4100-4200 by Fri – seven down weeks in a row for the DJIA needed an upside correction. Bitcoin made a multi-week low at 27995 before reversing higher with the market this morning, but the SPX appeared to lead Bitcoin higher. The bond market gave us a 3-wave correction into today as the 10-yr US rate bounced to test 2.8%. Crude oil is running up into the New Moon Timing Window and giving us a B-Wave test of $115.56 – how we navigate through the New Moon Timing Window will tell us about the short-term trend of crude oil. The oil stocks rallied to highs for the year at 87.59 – highs for the year. The USD is plunging overnight to 101.43 – both the Yen and Euro are moving higher.
5/26/22 (Commentary for Thursday) Led by Chinese tech, the SPX and NDX rallied to a big market day. As expected, the move above SPX 4000 brought in some short-covering and gave us a ride to 4075. For Friday, with the Option Premium Ratio still over 3 there is still more rally potential as more shorts could get forced to cover. Many traders and investors are now pondering whether the SPX made an important low last Friday. Our bias is for a SPX rally to 4150 or more by Friday’s close. Bitcoin is rolling over Thursday night and that could be a weak tell for the SPX early Friday. 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 B-Wave test so far of $115.56 as we enter the New Moon Timing Window. The USD is plunging overnight to test 101.43 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 5/20 but that hasn’t been confirmed yet. 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 5/31 if it didn’t already at $1785 early on 5/16.
- Stocks – The SPX managed to get above SPX 4000 this morning and then short-covering took us to 4075. Our bias is for a run higher to SPX 4100-4200 by the holiday weekend. A break about SPX 4100 could get a boost from short covering.
- Gold – After Mars changed sign, gold gave us a $30 day decline into Wednesday and tested $1838 into 5/24-5/25, the Comex gold option expiration. We may have already seen the gold ICL at $1785 on 5/16.
- Silver – Silver is creeping higher to test $22.11 overnight.
- Bonds – Bonds only gave us a 3-wave correction and appears ready to rally and test 142’22.
- Crude Oil – Crude oil fell in 5-waves on the hourly and is now trying to make a B-Wave test of $115.56 going into the New Moon Timing Window. The XLE had a good rally into the close and tested 87.59 – highs for the year.
- Dollar Index – The USD is dropping overnight, and the Yen and Euro are running higher.
TURNING POINT DAY
The turn window for the next week is 5/24.
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