Folks,
Market Observations for the Week: A meltdown in Bitcoin and plunging bond prices gave the SPX a gap-down open and we ended up closing near the lows for the day at 3755. Our TRIN-5 indicator came in at 9.75 – higher than the Covid low on 3/23/20 – and this highly oversold level could lead to more down tomorrow if the PPI report comes in as hot as the CPI report on Friday. The bonds came down once again and the 10-yr US rate made it to 3.37% which is a multi-year high. Crude oil entered the Full Moon Timing Window today and undercut Friday’s low to $117.52 before spiking higher to $122.23 but the XLE corrected hard. After Friday’s strong close at $1882.5, gold plunged to $1809.2 into overnight Monday as the USD spiked to a 20-yr high at 105.28.
6/13/22 (Commentary for Monday) Our bias since 5/20 was that the SPX 3810 low was a Wave B down low and that it would be taken out after the “bear market bounce” ran its course – which was the SPX 4177 high on 6/2. The strong sell off from Monday’s open consisted of sell programs in stocks and bonds and 3810 was taken out quickly into the 6/13-6/14 Full Moon Timing Window. However, we got a very oversold TRIN-5 reading of 9.75 Monday, a multi-year high, and if the PPI report comes in hot early Tuesday, the stock washout could continue. If the PPI inflation report comes in lighter than expected, that could help form a short-term low for the SPX. Crude oil took out Friday’s low and tested $117.4 on Monday’s Full Moon Timing Window before reversing up sharply to tag $122.37 - the monthly trend in US crude oil inventories in 2022 is falling far under the average trend from 2009-2021 which is bullish for prices. Bitcoin is giving us a mini-crash to 20775 overnight Monday and that is a bearish bias for the SPX early Tuesday. Gold plunged to $1809 overnight Monday before bouncing but a test of $1800 into early Tuesday looks likely. The USD is testing 20-yr highs at 105.28 overnight Monday. Our current holdings are ~80% cash and ~ 20% in physical gold/silver/platinum and PM equities.
Big Picture on Stocks (UPDATED) – Monday’s SPX action confirmed that the first leg down in the 2022 Bear Market is still ongoing. 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 made an intermediate cycle low at $1785 on 5/16 and then bounced to $1882.5 on Friday after the CPI report. The price action on Monday argues for a retest of $1800 on Tuesday.
- Stocks – The SPX declined 150+ points on Monday and ended the day with a very oversold TRIN-5 at 9.75 which could mean more washout on Tuesday if the PPI inflation report doesn’t come in cooler than expectations.
- Gold – Gold came down hard on Monday with the nominal 10-yr US rate going to multi-year highs at 3.37% and the USD going to 20-yr highs. Gold declined on Friday to test $1827 before rebounding to $1882 on Friday’s close.
- Silver – Silver tested its S2 pivot support at $20.90 on Monday but an undercut low is possible on Tuesday.
- Bonds – Bonds plunged to 131’19 on the close Monday and may be close to 5-waves down on the hourly chart.
- Crude Oil – Crude oil is holding up into the Full Moon Timing Window.
- Dollar Index – The USD tested 105.28 on Monday – a 20-yr high.
TURNING POINT DAY
The turn window for this week is 6/13-6/14.
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