Folks,
Market Observations for the Week: The SPX appears to be tracing out a 4th wave correction from Monday, so we could see a 5th wave down into the 8/25-8/26 New Moon Timing Window that undercuts 4100. As we said yesterday, just a corrective SPX bounce into Friday’s New Moon would be bearish and so we expect an undercut low. 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 yearend – as Marty Zweig used to say, “Don’t fight the Fed”. Crude oil is making run into the 8/25-8/26 New Moon Timing Window and is testing $96 overnight. Gold is rallying in 5-waves and testing $1770 overnight. The USD appears to be coiling in a triangle between 108 and 109 as we approach Powell’s speech early Friday.
8/24/22 (Commentary for Wednesday) The SPX bounce from Tuesday looks corrective (perhaps a 4th wave) and it looks like we could see a SPX pattern completion below 4100 on Thursday. Overall, many traders are not “fearing the Fed” and that is bearish for lower prices in the intermediate term. The Fed could raise rates another 1.5 points before year end, but many traders are skeptical of this which is dangerous from our perspective. 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/Friday. 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 is spiking to test $96 as we enter the 8/25-8/26 New Moon Timing Window. Gold rallied in 5-waves to test $1770 overnight Wednesday. The USD appears to be coiling between 108 and 109 as we approach Powell’s speech on Friday. 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 tested $1740 early Monday and then rattled off a 5-wave rally to test $1770 overnight Wednesday.
- Stocks – The SPX has down hard the past three days and may need to undercut 4100 for a pattern completion tomorrow.
- Gold – Gold gave us a 5-wave rally from the early Monday low of $1740 into the 8/25-8/26 New Moon Timing Window.
- Silver – Silver’s rally from early Monday looks corrective.
- Bonds – Bonds made a low for the week at 136’05.
- Crude Oil – Crude oil spiked to test $96 and is carrying oil stocks higher.
- Dollar Index – The USD is coiling between 108 and 109 as we approach Powell’s speech on Friday.
TURNING POINT DAY
The turn window for this week is 8/25-8/26 which is the New Moon Timing Window.
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