Folks,
Market Observations for the Week: The SPX continued its correction from Friday – just a 3-wave decline that holds SPX 3929 (previous 4th wave) should be bullish for more gains into the 7/28 New Moon. Our turn window on 7/21 was based on the 34-day Fibonacci step out from the 6/17 low which is important to determine trend in the SPX. Crude oil is rallying to test its R1 resistance pivot overnight at $97.98 and could rally into the 7/28 New Moon. Bitcoin continued its decline to test its S2 support pivot at 20842. Gold is struggling to hold its key support at $1720 on a daily basis – an undercut low below $1678 post-fed is a possibility. The USD has a symmetry target of 104.3 going into ed Wednesday.
7/25/22 (Commentary for Monday) The SPX reversed down on the 7/21-7/22 turn window and the nature of this correction will tell us a lot early this week. The 6/17 low at SPX 3636 was an intermediate cycle low and the 34-day Fibonacci step out from that low will “test the strength” of this rally leg. Just a simple a-b-c SPX correction down into Fed Wednesday could set the market up for another rally leg after the Fed minutes on 7/27. However, if we get an EW 5-waves down from Friday’s early high post-Fed, this will be a SELL SIGNAL. Typically, both the SPX and gold correct into Fed Wednesday. Bitcoin diverged from the SPX late last week making a lower high and then continued its decline today. Bitcoin peaked at 24300 last Wednesday and gave us a heads up of the SPX correction on Friday. Crude oil bounced to $98 overnight and may be setting up for a rally into the 7/28 New Moon. Gold struggled to close above key support at $1720– gold could still make an undercut low of $1678 which would be a buy signal post-Fed. The USD is working on an EW a-b-c correction with a symmetry target around 104.3. The Euro has made an important low and appears to be rallying impulsively. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX held up into the 7/21-7/22 and made a high at 4012 early Friday – just a 3-wave pullback into the Fed Wednesday could give us a post-Fed rally extension. 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 struggled to hold $1720 today as gold does its typical correction into Fed Wednesday. The GDX underperformed again led by NEM. There is a chance that gold could undercut $1678 after the Fed minutes on Wednesday, and this could give us a short-term buy signal in gold.
- Stocks – The SPX appears to be making a simple a-b-c correction into Fed Wednesday – this would be bullish for a post-Fed rally extension.
- Gold – Gold struggled to close above $1720 today – if gold undercuts $1678 after the Fed minutes on Wednesday, that would be a short-term buy signal.
- Silver – Silver gave us a 3-wave rally from early Thursday and could test $18.12 after the Fed.
- Bonds – Bonds held up nicely today and have a seasonal tendency to bounce into the Fed minutes.
- Crude Oil – Crude oil rallied to test $98 overnight Monday - we could see a spike higher into the 7/28 New Moon.
- Dollar Index – The USD has a symmetry correction target that could take us to 104.3. The Euro has made a major low.
TURNING POINT DAY
The turn window for this week is 7/27-7/28 which includes the 7/27 Fed day and the 7/28 New Moon.
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