Folks,
Market Observations for the Week: The bears jumped to short the SPX early Monday and the market is declining into the Tuesday turn window. The SPX failed on its first attempt at testing its 200-dma last week but still has a chance at making another leg higher as the selling today seemed overdone in some sectors. With Powell’s speech on Friday and the New Moon Friday, there is a chance for a SPX rally into the weekend. However, overall, we believe that we’ve seen just a “bear market rally” from 6/17 and we believe that traders are not “fearing the Fed” here which could raise rates 1.5% higher going into year end. Bitcoin’s plunge on Friday, testing 21048, set the SPX up for its plunge today. Crude oil pulled back early Monday but still is above $91 overnight – it appears to be basing for a run higher into Friday’s New Moon. Gold continued to sub-divide its C-Wave down and tested $1738 early Monday. The USD rallied to 109.1 during Monday’s session which is pressuring both the PM sector and the SPX.
8/22/22 (Commentary for Monday) The SPX ran into technical resistance last week and declined hard into the Tuesday turn window with Monday’s SPY volume being greater than Friday’s. Overall, many traders are not “fearing the Fed” and that is bearish for lower prices. The Fed could raise rates another 1.5 points before year end, but many traders are skeptical of this. How the SPX trades into Tuesday’s turn window will determine if this bear market rally is over. The SPX, NDX and IWM all gave us a Negative Volume Reversal Day on Wednesday and on Friday which painted 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 implied more correction 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 that 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 on Tuesday is key. Crude oil corrected early Monday but rebounded over $91 overnight – this market is coiling for a run higher into the 8/26 New Moon. The C-Wave down for gold continued to sub-divide down and tested $1738 early Monday. The USD rallied to 109.2 on Monday pressuring the SPX and the PM sector. 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 and then another big down day on Monday – how we trade into Tuesday’s turn window will determine if this rally can retest last week’s high at SPX 4325. 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 continues to sub-divide down bearishly as the USD makes higher highs above 109. We are now looking for an undercut of $1678 in the next two weeks.
- Stocks – The SPX, NDX and IWM gave us Negative Volume Reversal Days on both Wednesday and Friday and that set us up for a big down day on Monday – how we trade into Tuesday’s turn window will determine the short-term trend going into Friday’s New Moon which features Powell’s speech.
- Gold – Gold is declining impulsively and tested $1738 early Monday.
- Silver – Silver dropped hard to $18.60 but only bounced correctively.
- Bonds – Bonds dropped to 137’25 and only bounced correctively which implies the trend is lower.
- Crude Oil – Crude oil is coiling around $91 for a spike into Friday’s New Moon.
- Dollar Index – The USD made multi-week highs at 109.2 on Monday and senses that higher US rates are coming sooner rather than later.
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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