Folks,
Market Observations for the Week: The SPX, NDX and IWM are undergoing a critical test this week. The SPX retraced 50%+ from the low on 6/17, tested its 200-dma and downtrend line and pulled back in a Negative Volume Reversal Day on Friday. How we trade into Tuesday’s turn window will determine if this rally was a bear market bounce or something more. Bitcoin’s plunge on Friday, testing 21048, is also a negative factor for the SPX. Crude oil tested its R1 resistance pivot at $91.50 on Friday and reversed down. Gold continued to sub-divide its C-Wave down and is testing $1759 late Friday as the USD spiked to 108.2. The USD put in a DCL (Daily Cycle Low) on 8/10 and has surprised many traders by its rally into the weekend.
8/21/22 (Commentary for Sunday) The SPX is at a critical juncture this week. Last week it retraced >50% of its 2022 bear market and then tested its 200-dma and downtrend line from January. How it trades into Tuesday’s turn window will determine if this market rally is over. The SPX, NDX and IWM all gave us a Negative Volume Reversal Day on Wednesday and on Friday which paints a bearish tape. The SPX got as overbought as any time in 2022 and the dip buyers returned. However, the SPX undercut its symmetry correction target of 4234 on Friday – down to 4218 - and this implies more weakness into Tuesday. The astro-finance has been extremely intense so far in August and the Uranus aspects which served to accelerate global markets higher in early August may be reversing their influence. The fact that Bitcoin plunged to 21180 on Friday also sets a negative tone for the SPX going into Monday. We still view the SPX run from 6/17 as a bear market rally but its longevity is being tested here – a run into mid-September is still possible but how we trade into Tuesday is key. Crude oil rebounded to test $91.50 on Friday but the rally doesn’t look impulsive so far. The C-Wave down for gold continues to sub-divide down and tested $1759 late Friday. The USD gave us a DCL on 8/10 and we saw 108.2 on Friday which is pressuring gold down. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX gave us a Negative Volume Reversal Day on Wednesday and Friday – how we trade into Tuesday’s turn window will determine if this rally has more to go. 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 rallied impulsively from $1678 to $1824 on the 8/10 Full Moon but is now giving us a C-Wave down that has tested $1759 late Friday – the strong USD is pressuring gold.
- Stocks – The SPX, NDX and IWM gave us Negative Volume Reversal Days on both Wednesday and Friday – how we trade into Tuesday’s turn window will determine the short-term trend for the stock market.
- Gold – Gold is declining in a C-Wave that tested 1759 late Friday.
- Silver – Silver pulled back hard to test $18.92 on Friday as the USD spiked.
- Bonds – Bonds tested 138’07 on Friday and may be rolling over.
- Crude Oil – Crude oil tested $91.50 on Friday but the move was not impulsive.
- Dollar Index – The USD made multi-week highs at 108.2 on Friday.
TURNING POINT DAY
The turn window for this week is 8/23 which is the Tuesday after a monthly option expiration.
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