Folks,
Market Observations for the Week: The SPX rallied to 4012 early Friday before starting a correction. The SPX declined in 5-waves on the 5-min chart 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. Our solar-lunar tables may be hinting at a trending move here in the NDX and that most likely would be down. Crude oil gave us an EW 5-waves down on the hourly chart and appears to be rolling over here. Bitcoin also appears to be rolling over here and that is a negative bias for the SPX early Monday. Gold tested $1736 on Friday and then started rolling over – many gold advisors have turn bullish here. The USD made lows for the weak on Friday as the Euro rebounded.
7/24/22 (Commentary fo Sunday) The SPX came close to filling the gap from 6/9 at 4015 and reversed down in an EW 5-waves on the 5-min chart. 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 quick 3-wave SPX correction down into early next week 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 this will be a SELL SIGNAL. Typically, both the SPX and gold correct into Fed Wednesday. Bitcoin diverged from the SPX making a lower high. Bitcoin peaked at 24300 last Wednesday and gave us a heads up of the SPX correction on Friday. Crude oil made lows for the week on Friday at $94.19 and appears to be rolling over. Gold tested key support at $1675 and then bounced $60 while the gold stocks underperformed – gold could still make an undercut low of $1678 for a trading signal next week. The USD is working on an EW a-b-c correction with a symmetry target around 104.3 and this giving gold and silver a bounce. The Euro has made an important low. 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 tested $1675 support today and spiked up $60. The GDX underperformed. 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 made a partial gap-fill at 4012 from 6/9 and then started a correction – just a 3-wave correction into Fed Wednesday would be bullish for a rally extension.
- Gold – Gold tested $1678 and bounced $60 – 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 tested their R2 pivot at143 on Friday and started to correct sideways – bonds have a seasonal tendency to bounce into the Fed minutes.
- Crude Oil – Crude oil may be rolling over here but we could see a spike higher into the 7/28 New Moon.
- Dollar Index – The USD fell in 5-waves from 109.26 to 106.41 into Tuesday and then a weak sideways bounce which rolled over to make weekly lows on Friday. A symmetry correction for the USD 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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