Folks,
Market Observations for the Week: The SPX rallied into the weekend and started a correction on Tuesday that continues. A pullback into Friday’s NFP jobs report could give us a correction low and reversal higher in the “bear market rally” into 6/3-6/6. Our bias is that the rally from 5/20 is a “bear market rally” and the corrective action so far this week could extend this rally into next week. The bond market continued its correction into Wednesday and the 10-yr US rate tested 2.95%. Crude oil tested $120 on Tuesday and then reversed down. Crude oil continued down on Wednesday as a lot of bullishness should already be factored in. The USD spiked higher to test 102.7 and put the Yen and Euro under pressure.
6/01/22 (Commentary for Wednesday) After a strong market breadth day on Friday which gave us a “Zweig Breadth Thrust”, the SPX continued to correct into Friday’s NFP jobs report. We view the market rally from 5/20 as another “bear market rally” but it could extend its rally into early next week. The CORRECTIVE PULLBACK in the SPX so far this week argues for a higher target in this “bear market rally” to 4200-4300 by 6/3-6/6. The bond market continued its correction into Wednesday and gave us a bounce in the 10-yr US rate to 2.88%. In typical fashion, crude oil spiked to test $120 in the New Moon Timing Window – how we trade into Thursday 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 as well. Gold tested $1830 yesterday and then bounced hard today to test $1853. The USD continued its bounce to 102.7 and the Yen got sold hard. 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 continued its correction into Friday’s NFP jobs report. This “bear market rally” could run a few days longer until we get a TRIN-5 sell signal.
- Gold – Gold pulled back to test $1830 near the open today and bounced to $1853.
- Silver – Silver rebounded to test $22 again.
- Bonds – Bonds may have finished a 3-wave correction into Wednesday and is bouncing.
- Crude Oil – Crude oil spiked on Tuesday to test $120 and then reversed down – just a 3-wave correction will be bullish, however, more subdivision down could imply that an important high was made this week at $120.
- Dollar Index – The USD bounced to 102.7 on Wednesday and continued to pressure the Yen.
TURNING POINT DAY
The turn window for this week is 6/3 which includes the NFP jobs report.
Comments