Folks,
Market Observations for the Week: The E-mini is making a lower low overnight Tuesday but could see a bounce into Friday’s New Moon and Powell’s speech. Just a corrective SPX bounce into Friday’s New Moon would be bearish. 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. Crude oil tested $94 today and is beginning a run into the 8/26 New Moon. Gold tested $1744 early Tuesday and then rallied to touch $1767. The USD pulled back to test $108 early today and gave gold some room to rally.
8/22/22 (Commentary for Tuesday) The SPX may have made a low in Tuesday’s turn window and we now could see a bounce into Friday’s New Moon with Chairman Powell’s speech. 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. 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 last Friday, 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 now. We still view the SPX run from 6/17 as a bear market rally but its longevity is being tested this week – a run into mid-September is still possible but how we trade into Friday is key. Crude oil spiked to $94 Tuesday and oil stocks had a big run – this market is coiling for a run higher into the 8/26 New Moon. Gold bounced to $1767 Tuesday as the USD pulled back to 108. 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 Friday 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 have come down hard the past three days and are due a bounce into Friday’s New Moon – just a 3-wave corrective rally into Friday will be bearish.
- Gold – Gold gave us just a 3-wave bounce to $1767 which looks bearish.
- Silver – Silver appears to be giving us just a 4th wave bounce here which is bearish.
- Bonds – Bonds dropped to 137’03 and continued their downtrend.
- Crude Oil – Crude oil spiked to $94 and carried oil stocks higher.
- Dollar Index – The USD pulled back to 108 and gave the PM sector a chance to bounce.
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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