Folks,
Market Observations for the Week: The SPX traced out an EW 5-waves higher from the 6/16 low and started a correction late in today’s session. The nature of this SPX correction will determine the short-term trend of the market. Just a 3-wave correction would be bullish for highs above SPX 3800 but 5-waves down on the hourly chart will argue for lower lows in the near term. Bitcoin traded below 20000 again overnight Wednesday before bouncing back. The Tuesday after a monthly option expiration is a turning point day in our work and we have a 3-star critical reversal day for the SPX on 6/21-6/22 – we could have seen a significant high today. Our next lower target of SPX 3500 could still be in play in the short-term. The GDX/GLD ratio continues to point down and that leaves gold in a choppy sideways phase. The USD continues to trace out a large EW a-b-c correction after the Swiss central bank raised its rate by 50-basis points last week.
6/22/22 (Commentary for Wednesday) The SPX rallied in an EW 5-wave advance into the 3-star critical reversal window 6/21-6/22 on Wednesday and we started a correction down late in the session. The SPX has a 3-star critical reversal day on June 21-22 and if it came in as a high on Tuesday/Wednesday that could be bearish for another leg down in the SPX this week. The SPX got historically oversold last week but the rebound from last Thursday has lacked power so far – we may need more washout down to 3500 this week before a substantial rebound. The SPX bounced from Thursday and rallied into the powerful Venus square Saturn aspect on Tuesday/Wednesday which could give us a reversal back down. Bitcoin is testing 20000 again overnight Wednesday and this gives the SPX a negative bias for early Thursday. Crude oil fell to test $101.53 early Wednesday and appears to be sub-dividing down impulsively – we could be doing a C-Wave down from the B-Wave top at $123.57 on 6/14. Gold stocks are underperforming gold here and that has us looking for a choppy sideways trading range for gold. The USD appears to be tracing out a complex correction and is holding up near its Person’s pivot of 104.33 overnight Wednesday. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – Last week’s SPX action confirmed that the first leg down in the 2022 bear market may still be ongoing. Longer term, the SPX could give us a 20%-50% correction by spring 2023 as the 20-yr cycle low bottoms and the US economy slows to a recession. We favor a high percentage of cash for capital preservation.
Big Picture on PMs (UPDATED) – Gold stocks are underperforming gold here and that may relegate gold to a choppy sideways trading range in the near term. Weakly trending gold stocks may imply more weakness in the SPX.
- Stocks – The SPX rallied in an EW 5-waves higher into the 6/21-6/22 3-star critical reversal window which may have come in as a high today – how we trade on Thursday will enlighten us.
- Gold – Gold stocks are underperforming gold and that argues for more choppy, sideways trading for gold.
- Silver – Silver continues in its trading range under $22.
- Bonds – Bonds continued to rally as the 10-yr US rate declined in 5-waves down on the hourly chart.
- Crude Oil – Crude oil declined to $101.75 early Wednesday and appears to be in a large C-Wave down from the Full Moon high at $123.68 on 6/14.
- Dollar Index – The USD declined in 3-waves after the Swiss central bank raised its rate by 50-basis point on Thursday and the correction appears to be going complex.
TURNING POINT DAY
The turn window for this week is 6/21-6/22.
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