Folks,
Market Observations for the Week: The SPX opened strong but then corrected sideways in a 4th wave correction. Our bias is for a low by tomorrow and then a run to 4000 into Friday before the holiday weekend. We are looking at this bounce as another Bear Market rally that has potential to SPX 4100-4200. Our TRIN-5 indicator remains oversold at ~6 and this could keep the rally going into next week. Bitcoin continues to base around 21000 which is bullish for a short-term bounce. Gold continues to work its way down and another test of $1800 is possible. The USD is tracing out a sideways triangle and continues to trade around 104.
6/27/22 (Commentary for Monday) The SPX started a 4th wave correction early Monday that should continue into Tuesday. A 5th wave higher to test SPX 4000 is likely by Friday. Last week’s decline in the SPX into the 6/18 Venus square Saturn aspect was the launching pad for this bear market rally. We would not be short the SPX, NDX or IWM here. We are seeing another large bear market rally that could take us above SPX 4000 into Friday’s holiday weekend. Bitcoin continued to base around 21000 as the SPX corrected today. Crude oil continued its corrective bounce and tested $110. Our bias is that crude oil is in a C-Wave down from the B-Wave top at $123.57 on 6/14 and that it could test $87-$90. Gold continues to grind lower and could see another test of $1800 soon. The USD is tracing out a sideways triangle and is holding up near its Person’s pivot of 104. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX started a 4th wave correction Monday that should resolve in a 5th wave higher above 4000 on Friday. 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 turned higher on the 6/18 Venus square Saturn aspect and could see 4000 by Friday.
- Gold – The GDX continues to underperform gold here and that should hold gold in a choppy, sideways trading range.
- Silver – Silver continues in its trading range $20.5 - $22 but the silver COTs continue to look strong.
- Bonds – The Treasuries looked weak after a bad 5-yr US note auction.
- Crude Oil – Crude oil appears to be in a large C-Wave down from the Full Moon high at $123.68 on 6/14.
- Dollar Index – The USD is tracing out a triangle after the Swiss central bank raised its rate by 50-basis point on 6/16 but continues to hold up near 104.
TURNING POINT DAY
The turn window for this week is 6/27-6/28.
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