Folks,
Market Observations for the Week: The SPX received the 75-basis point rate hike well today and some Fed critics actually believe that the Fed has regained some of its credibility. As it turned out the SPX finished just a simple EW a-b-c correction at 3910 late Tuesday before rocketing higher on today’s Fed Day. The 34-day Fibonacci step out from the 6/17 low led to just a 3-wave correction and today’s rally extension. The rally in crude oil still looks corrective to us so a thrust down into the 7/28-7/29 New Moon Timing Window is a possibility. Bitcoin followed the market higher and tested 23462 near its R1 resistance pivot. Gold rallied post-Fed and is testing $1752 overnight – well above the critical $1720 resistance line. The Fed rate hike spiked the USD to 107.39 but it fell back to 106.17 overnight.
7/27/22 (Commentary for Wednesday) The SPX reversed down on the 7/21-7/22 turn window and gave us a simple EW a-b-c correction to 3910 late Tuesday before the extended rally on Wednesday. The 6/17 low at SPX 3636 was an intermediate cycle low and the 34-day Fibonacci step out from that low “has confirmed” more strength into the 7/28-7/29 New Moon Timing Window. Just a simple a-b-c SPX correction down into late Tuesday set the market up for another rally leg. Typically, both the SPX and gold correct into Fed Wednesday. Bitcoin also made its low late Tuesday and reversed up in a big rally today. The rally in crude oil still looks corrective to us so our bias is for a spike down into the 7/28-7/29 New Moon Timing Window. Gold rallied post-Fed and tested $1758 overnight. The USD gave us a “head fake” post-ed to 107.4 before reversing down to test weekly lows at 106.15. 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 gave us just a 3-wave pullback into late Tuesday which set up the Fed Day rally extension to 4039. 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 popped to $1758 post Fed and closed above the critical $1720 key support. We had “stink bids” in for GLD calls that never got triggered.
- Stocks – The SPX made a simple a-b-c correction into late Tuesday at 3910 – and this was bullish for a Fed Day rally extension.
- Gold – Gold popped to $1758 post-Fed and held the gains into the close. Our trigger to buy GLD calls was never touched post-Fed.
- Silver – Silver also rallied hard post-Fed on good volume and is testing $19.25 overnight.
- Bonds – Bonds held up well after the ed rate hike.
- Crude Oil – Crude oil could see a spike lower into the 7/28-7/29 New Moon.
- Dollar Index – The USD gave us a head fake to 107.4 post-Fed before pulling back to test weekly lows at $106.15 overnight. 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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