Folks,
Market Observations for the Week: Typically, the SPX pulls back into the FOMC minutes, and we started that today. The SPX tested its 200-dma near 4336 today and dropped quickly. The SPX made a bearish divergence with its NYSE breadth on Monday’s rally and that set us up today for a pullback. Our TRIN-5 indicator remains in serious overbought territory, so more decline into the FOMC minutes is a possibility on Wednesday especially with the Option Premium Ratio SELL SIGNAL that we got yesterday. Bitcoin pulled back to test its S1 pivot at 23607 but the correction has only been 3-waves and that argues for higher prices post -Fed tomorrow. Crude oil undercut $86 today as natural gas prices took center stage by popping above $9. Gold continues to sub-divide its C-Wave down as it does its seasonal pullback into the FOMC minutes tomorrow. The USD put in a DCL (Daily Cycle Low) on 8/10 as it closed above its downtrend line and 10-dma.
8/16/22 (Commentary for Tuesday) The SPX tested its 200-dma and started a pullback into the FOMC minutes on Wednesday. With multiple TRIN-5 SELL SIGNALS and an Option Premium Ratio SELL SIGNAL, the SPX is as overbought as any time in 2022 but traders are buying every dip here. Our bias is for a quick pullback to test 4200 support by Wednesday/Thursday before starting a rally to test 4300+ by the 8/27 New Moon. The astro-finance has been extremely intense so far in August and the Uranus aspects have served to accelerate global markets higher. To us, the blow off last week into the 8/10-8/15 Full Moon Timing Window (which usually statistically correlates as a low) resembles the markets of late 2021 and suggests more rally into the 8/27 New Moon Timing Window. The fact that Bitcoin rallied to test 25,270 overnight Sunday was suggestive of higher prices in the NDX early this week. We still view the SPX run from 6/17 as a bear market rally but it could last into mid-September and venture above SPX 4400. Crude oil continues to impulse down but some traders view $85 as a trading buy. The C-Wave down for gold continues to sub-divide bearishly into the FOMC minutes. The USD gave us a DCL on 8/10 and so we are looking for more rally. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX made an important ICL on the Fibonacci 5-month step out from the Jan high on 6/17 and we are now looking for this rally to last until the Fibonacci 8-month step out into September. After a quick pullback into Wednesday/Thursday that finds support at 4200, we could see the SPX rally to 4300+ into the 8/27 New Moon. 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 into the FOMC minutes on Wednesday.
- Stocks – The SPX tested its 200-dma today at 4326 and started a pullback into tomorrow’s Fed minutes. We are looking for a quick pullback into the Wednesday/Thursday that could test 4200 support before higher highs into next week.
- Gold – Gold rallied impulsively from $1678 to $1824 before a sideways correction into Friday – we are now getting a C-wave down that could test $1780 into the FOMC minutes tomorrow.
- Silver – Silver undercut $20 today and tested $19.85 going into the FOMC minutes tomorrow.
- Bonds – Bonds may have finished an EW a-b-c correction.
- Crude Oil – Crude oil undercut $86 today.
- Dollar Index – The USD made a DCL on 8/10 and is now in rally mode as gold corrects.
TURNING POINT DAY
The turn window for this week is 8/15 which is the last day of the Full Moon Timing Window.
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