Folks,
Market Observations for the Week: The PPI came in a little tamer than expected but the SPX still couldn’t mount any convincing rallies intraday. Our TRIN-5 indicator came in at 9.86 – the highest in our database – and this highly oversold level could lead to more down tomorrow if the Fed minutes and press conference continue to track hawkish. A rumor of a 75-basis point Fed rate hike hit the market today and kept it under pressure throughout the session. We are expecting tremendous volatility this week from the following five factors: the 6/13-6/15 Full Moon Timing Window, the 6/14 monthly VIX expiration, multiple astro-finance aspects, the 6/15 Fed day and the 6/17 quad-witching expiration – so traders need to buckle up. The bonds continue to lead stocks down and hit 131’03 which took the 10-yr US rate to 3.48% - another multi-year high. Crude oil hit $123.68 near the exact Full Moon and then dropped a quick $7 to 116.62 – the XLE may be rolling over here. Gold tested $1807 late Tuesday as we head into Fed Wednesday – gold has a tendency to pull back into a Fed day. The USD powered to another 20-yr high at 105.
6/14/22 (Commentary for Tuesday) Rumors of a 75-basis point Fed rate hike held the SPX down today without much upside volatility. All the major stock indices made lower lows on today’s Full Moon as we approach tomorrow’s Fed Day. However, the monthly VIX option expiration occurred today and the day following has given us intense volatility every month of the year so far. In fact, we expect major volatility into the weekend from five sources: the 6/13-6/15 Full Moon Timing Window, the 6/14 monthly VIX expiration, multiple astro-finance aspects, the 6/15 Fed Day and the 6/17 quad-witching expiration. Our TRIN-5 indicator came in at 9.86 which is conducive to more market meltdown post-Fed. Bitcoin is rolling over and testing its S1 pivot support at 20750 and that is a negative bias for the SPX early Wednesday. Crude oil gave us a 3-wave spike up to $123.68 near the exact Full Moon before reversing down sharply to test $116.62 - 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. Gold gave us an EW 5-waves down from $1882.5 on Friday’s close and tested $1806 before rebounding – did gold make an important low? The USD is testing 20-yr highs at 105.65 overnight Tuesday. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
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. Gold tested $1806 late Tuesday and may have made an important low.
- Stocks – The SPX made lower lows Tuesday on a weak tape with a very oversold TRIN-5 at 9.86 which could mean more washout after the Fed minutes and press conference Wednesday afternoon.
- Gold – Gold came down hard on Tuesday with the nominal 10-yr US rate going to multi-year highs at 3.48% and the USD going to 20-yr highs. Gold declined in an EW 5-wave down from Friday’s high at $1882.5 and may have bottomed at $1806.
- Silver – Silver may have finished an EW a-b-c correction at $20.85 and is reversing up on Fed Day.
- Bonds – Bonds plunged to 131’03 on the close Tuesday and may be close to 5-waves down on the hourly chart.
- Crude Oil – Crude oil gave us a 3-wave spike to $123.68 near the exact Full Moon before falling sharply to $116.62.
- Dollar Index – The USD tested 105.65 on Tuesday – a 20-yr high.
TURNING POINT DAY
The turn window for this week is 6/13-6/14.
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