Folks,
Market Observations for the Week: The SPX has been working sideways since Tuesday’s early high at 3946 and hard reversal down to 3798.34 early Wednesday. The market appears to be waiting for the PCE report early Thursday and that should confirm the short-term trend in the SPX. IF the “inflation is peaking” traders get a weaker than expected PCE report, they could drive the SPX for a test of 4000 by Friday. A stronger than expected inflation report would generate more selling in stocks below SPX 3798. Crude oil spiked into the 6/28-6/29 New Moon Timing Window, tested $114, and then reversed down today. Our bias is that the rally in crude oil this week was corrective and we are looking for lower lows below $101.53. Our TRIN-5 indicator remains oversold at 7.00 and this could give us quite a rally early Thursday if the PCE report is favorable. Bitcoin is still trending sideways about 20000 support overnight Wednesday. Gold made lows for the week at $1810.7 in the New Moon Timing Window and appears to be grinding down for a test of $1800. The USD broke up out of its triangle pattern and tested its R2 pivot at 105.22 and this pressured the PM sector down.
6/29/22 (Commentary for Wednesday) The SPX is treading water until the PCE inflation report early Thursday. If the “peak inflation” traders get the PCE number they are looking for, they could push the SPX back higher for a test of 4000 by Friday. A stronger inflation number than expected, however, would continue the selling in the SPX that started on Tuesday. Our TRIN-5 indicator is very oversold at 7.00 and this could fuel an impressive rally phase if the PCE report breaks the right way. On the other hand, it is also possible that on 6/28, the 55-day Fibonacci step out from 5/4 gave us an important high at 3946 early Tuesday. A convincing break below Wednesday’s low at SPX 3798 would be bearish for lower prices into 7/20. Bitcoin is hanging around 20000 overnight Wednesday and that is bearish for the SPX early Thursday. Crude oil continued its spike into today’s New Moon Timing Window and tested $114 before reversing down – we have viewed this week’s rally in crude oil as CORRECTIVE and are looking for lows below $101.53. 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 continued lower in today’s New Moon Timing Window and tested $1810.7 before bouncing. The USD broke up out of its triangle pattern and tested 105.19 which pressured the PM sector. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX may have started a 4th wave correction Monday that should resolve in a 5th wave higher to test SPX 4000 by Friday if traders like the PCE inflation report early Thursday. 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 is treading water going into Thursday’s PCE inflation report which should set the short-term trend.
- Gold – Gold continued lower to test $1810.7 as the USD roared back to the 105 level.
- Silver – Silver continued lower and looks to test $20.54.
- Bonds – Bonds continued higher today as crude oil reversed down.
- Crude Oil – Crude oil spiked into today’s New Moon Timing Window and tested $114 before reversing down.
- Dollar Index – The USD broke out of its triangle to test the R2 pivot resistance at 105.12 which pressured gold.
TURNING POINT DAY
The turn window for this week is 6/27-6/28.
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