Folks,
Market Observations for the Week: The NFP jobs report came in in blow out fashion and exceeded > 500,000 jobs as the EW 5-waves down in the US bond market into Wednesday had predicted. Our Option Premium Ratio indicator gave us back-to-back readings of 0.87 on Thursday which is a SELL SIGNAL. Even so, the SPX and NDX held up quite well and there is even a chance of a higher high in the SPX on Monday. Rising rates could still take the wind out of the technology stock rally which supported the SPX move to 4168. Crude oil tested $87 on Friday and continues to subdivide down in a bearish way – this is a sign of a global economic slowdown. Gold tested $1812 overnight Thursday and closed Friday at $1788. Gold traced out 5-waves higher from the $1678 low which is bullish. The USD tested 106.93 after the strong NFP jobs report and made highs for the week.
8/07/22 (Commentary for Sunday) The stock market absorbed the stronger than expected NFP jobs report in an orderly manner with the DJIA and Russell 2000 closing up for the day while the SPX and NDX closed down. The 6/17 low at SPX 3636 was an intermediate cycle low and rallying past the 34-day Fibonacci step out on 7/22 was a Sign of Strength for more rally extension to perhaps 4200. The SPX may have traced out an EW a-b-c-d-e triangle intra-day on Friday and the Russell 2000 (IWM) may have squeezed out a final 5th wave diagonal to 191.02 late Friday. The EW 5-wave down on the hourly bond chart had us expecting a hotter than expected NFP jobs report Friday and that came to pass – just a symmetry correction in bonds could target 139’15. After days of weak technical action, crude oil tested $87 on Friday and looks to go lower which is a sign of global economic slowdown. Gold rallied to $1812 late Thursday and finished an EW 5-waves up off the $1678 low which is bullish. The USD spiked to 106.93 after the strong NFP jobs report and made multi-week highs. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX gave us a gap-down open after the strong NFP jobs report and then a sideways triangle – we favor another leg down on Monday. 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 traced out 5-waves higher from the $1678 low when it bounced back above $1800 and tested $1820 – just a 3-wave correction from Thursday would be short-term bullish.
- Stocks – Our Option Premium Ratio gave us back-to-back values of .87 on Thursday which is a SELL SIGNAL for the SPX – we would use early strength on Monday to exit long positions.
- Gold – Gold traced out an EW 5-waves higher to $1812 from the $1678 low – just a 3-wave correction from Thursday’s high would be bullish for more gains.
- Silver – Silver tested $18.50 after the NFP jobs report and then bounced back to $19.84.
- Bonds – A symmetry correction in bonds would take us back to 139’15.
- Crude Oil – Crude oil is sub-dividing down bearishly and tested $87 on Friday.
- Dollar Index – The USD spiked to 106.93 after the NFP jobs report on Friday – a weekly high.
TURNING POINT DAY
The turn window for this week is 8/8-8/9.
Comments