Folks,
Market Observations for the Week: The SPX gave us the first leg down in its bear market from from Jan 4 to June 17 and since then are rallying in a 3-wave corrective bounce. The 13-day Fibonacci step out from 6/17 to 6/30 gave us a trading low on 6/30 at SPX 3738 and then we bounced into Friday’s 3828. If the C-Wave of an a-b-c bounce started on 6/30, we could see a symmetry test of SPX 4000 this week. However, taking out 3830 would argue for more washout into the 7/20-7/21 34-day Fibonacci step out from the 6/17 low. How we trade on Tuesday will be key to the short-term trend. Crude oil gave us a 3-wave bounce into Monday - how we trade on Tuesday is key. Bitcoin tagged 18525 last Thursday before rebounding – how it trades on Tuesday is also important. Gold took out its 5/16 low and tested $1783 on 6/30 and then rebounded. The 3-star critical reversal day for gold fell ideally on 6/30 and came in as a low. The USD spiked to a weekly high at 105.65 on Friday.
7/04/22 (Commentary for Monday) The SPX reversed up on the 13-day Fibonacci step out at 3738 on 6/30 and finished Friday strong – a symmetry a-b-c corrective bounce from 6/17 could see us testing SPX 4000 this week. However, the 3-wave rally up to 3940 on 6/28 could have been the entire a-b-c bounce and a move under SPX 3738 could take us down to new lows under the 6/17 low by the 7/20-21 turn window. Our TRIN-5 indicator continues very oversold at an elevated 6.95 and this could be still arguing for more washout this week – how we trade on Tuesday will set the short-term trend for the SPX. Bitcoin tagged 18525 on Thursday and is trying to bounce – how we trade on Tuesday will be important to its short-term trend. Crude oil is giving us a 3 - wave bounce from Thursday into Monday – we have viewed last 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 soon. Gold took out the 5/16 low and tested $1883 on 6/30 which was the ideal 3-star critical reversal day – an important short-term low was made. The USD rallied to 105.65 on Friday and higher targets are still in play. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX reversed higher at 3738 on 6/30 and bounced into Friday’s close at 3830 – how we trade on Tuesday is key for the short-term trend. 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 and gold stocks washed out into the New Moon Timing Window last week on 6/30 and bounced. Gold turned up on the ideal 3-star critical reversal day on 6/30.
- Stocks – The SPX made a low on the 13-day Fibonacci step out from 6/17 at 3738 on 6/30 and bounced into Friday’s close – a symmetry EW a-b-c corrective bounce could test 4000 this week – how we trade on Tuesday will set the short-term trend.
- Gold – Gold and gold stocks washed out into last week’s New Moon on 6/30 which was also the 3-star critical reversal day. Gold may have made a short-term low.
- Silver – Silver tested $19.29 on the 6/30 low and bounced. Gold and silver typically decline into the monthly NFP jobs report on Friday.
- Bonds – Bonds spiked to 141’11 on Friday and the 10-yr US rate tested 2.79%.
- Crude Oil – Crude oil is testing $110 on Monday in global markets – we still are looking for a test of $90.
- Dollar Index – The USD spiked to 105.65 on Friday and appears to have higher targets in mind.
TURNING POINT DAY
The turn window for this week is 7/8 – the NFP jobs report.
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