Folks,
Market Observations for the Week: The SPX shorted out its 55-day mini-crash pattern on 5/20 and formed a trading low. The rally from 5/20 is a “bear market rally” driven by short covering and could extend this week after a small pullback on Tuesday. The New Moon Timing Window helped pull the SPX up into the weekend. After seven down weeks in a row for the DJIA, we got an up week last week. Bitcoin is holding up Monday evening and that is a positive tell for the SPX early Tuesday. The bond market gave us a 3-wave correction into the weekend as the 10-yr US rate bounced to test 2.8%. Crude oil is rallying to multi-week highs at 117.2 on Monday – how we navigate the New Moon Timing Window will tell us about the near-term trend of crude oil. The XLE tested highs for the year at 88.95 on Friday into the New Moon Timing Window. The USD declined to 101.30 on Friday – both the Yen and Euro are moving higher.
5/29/22 (Commentary for Sunday) The SPX rallied to 4158 into Friday’s close as the New Moon Timing Window pulled us higher into the weekend. The SPX gave us a trading low on 5/20 and we got another “bear market rally” last week that was driven by short covering and a pullback in rates. The Option Premium Ratio gave us a large pullback from 3.08 to 1.78 on Friday and that argues for early for early strength on Tuesday. However, just a CORRECTIVE PULLBACK in the SPX early this week will argue for a higher target in this “bear market rally” to 4200-4300 by June 3. The bond market may have finished a corrective pullback on Friday and is prepared to move higher which could support the SPX early Tuesday. Bitcoin held up into Friday’s close – how Bitcoin trades overnight Monday will be a tell for the SPX early Tuesday. In typical fashion, crude oil is spiking to $117.2 on Monday’s New Moon – how we trade after the passing of the New Moon Timing Window will set the near-term trend of crude oil. Typically, the price of gasoline peaks on Memorial Day weekend with all the national travel going on – how gasoline trades later this week will set the near-term trend. Gold rallied in 5-waves higher from the $1785 low and was in the process of correcting that move on Friday – if gold pulls back and makes a higher low, this will be constructive in the short term. The USD declined to 101.29 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. Longer term, 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 may have seen an intermediate cycle low at $1785 on 5/16 and if gold pulls back to a higher low this week above $1785 that could be bullish.
- Stocks – The SPX could test 4200 early Tuesday before a correction takes hold. Just a corrective pullback early this week will have us looking for SPX 4300 by Friday. This “bear market rally” could run a few days longer until we get a TRIN-5 sell signal.
- Gold – Gold gave us a B-Wave test of $1873 early Friday and may have started a C-Wave down to test $1800.
- Silver – Silver gave us a small correction into the New Moon Timing Window, but the Silver COTs continue to look bullish.
- Bonds – Bonds gave us a 3-wave correction into Friday and appears ready to rally and test 142’22.
- Crude Oil – Crude oil is spiking on Monday’s New Moon to test $117.2 – just a 3-wave correction will be bullish. The XLE had a good rally on Friday and tested 88.85 – highs for the year.
- Dollar Index – The USD fell to 101.29 on Friday and that is boosting the Yen and Euro.
TURNING POINT DAY
The turn window for the next week is 5/31 which is in the New Moon Timing Window.
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