Folks,
Market Observations for the Week: The SPX rallied early to 3945.86 and then declined impulsively into the close. Is the bear market rally over, or do we have another leg up into Friday? The strength of today’s decline did surprise us, but the SPX did decline into today’s New Moon. Our bias is that the SPX can rally into Friday and still test 4000. It all depends on how the PCE inflation report is perceived by the market early Thursday. Our TRIN-5 indicator remains oversold at 6.48 and this could give us a rally early Wednesday. Bitcoin is testing 20000 overnight Tuesday which is bearish for the SPX early Wednesday. Crude oil really spiked into today’s New Moon and tested $112.31. The strength of crude oil for the past three days has somewhat stressed the market which wants to believe in the “peak inflation” story. Gold may have made a short-term low today going into the New Moon. The USD continues to trace out a sideways triangle and continues to trade around 104.
6/28/22 (Commentary for Tuesday) The SPX selloff today was stronger than expected but it corrected into our turn window for the week 6/27-6/28, and so we believe that the SPX still has a shot to test SPX 4000 by Friday if the market likes the PCE inflation report early Thursday. Last week’s decline in the SPX into the 6/18 Venus square Saturn was the launching pad for this bear market rally. A convincing break below Tuesday’s low at SPX 3820 would turn us cautious, though. The PCE inflation report early Thursday is very important to the “peak inflation” crowd this week. Bitcoin is testing 20000 overnight Tuesday and that is bearish for the SPX early Wednesday. Crude oil continued its spike into today’s New Moon and tested $112.3 – this was also unsettling to the “peak inflation” crowd. Our bias remains 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 may have made a short-term low in the New Moon today at $1819. The USD is still 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 strength of the SPX decline did surprise us today but it could be a Running B-Wave corrective pattern – if so, we should turn up Wednesday and be testing 4000 by Friday.
- Gold – Gold may have made a short-term low at $1819 today and could give us a bounce.
- Silver – Silver may have finished an EW a-b-c correction on today’s New Moon.
- Bonds – Bonds got a bid today after the SPX fell hard early.
- Crude Oil – Crude oil is spiking into today’s New Moon and tested $112.3.
- 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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