Folks,
Market Observations for the Week: The 5-min chart of the SPX continues to decline in 5-waves and rally in 3-waves which is bearish. We continue to look for lower lows in the SPX by Friday. Bitcoin traded below 20000 which is another bearish tell for the SPX. Early economic reports Wednesday include the ADP jobs report and the Chicago PMI. Crude oil fell a fast $7 Tuesday and that brought the XLE down hard. Gold made lows for the week at $1730.8 Tuesday as the USD tested 109.
8/30/22 (Commentary for Tuesday) The SPX tagged $3965 today but made another sideways continuation pattern that has us looking at lower prices going into Friday’s NFP jobs report. Bitcoin traded below 20000 which is another bearish sign for the SPX on Wednesday. So far, the reversal signature from Venus going into Opposition with Saturn Sunday night, has only been a corrective bounce which is bearish for lower SPX lows. The summer rally in stocks appears to have peaked out at SPX 4325 on a test of its 200-dma and the downtrend has resumed. Crude oil fell a whopping $7 on fears that Russian excess production to pay for its Ukrainian war is creating a global glut. Gold pulled back to undercut its $1731 low and tested $1730.8 to make lows for the week so far. Gold has a seasonal tendency to decline into Friday’s NFP jobs report. The USD may be tracing out another bull flag pattern after it made highs for the year at 109.48. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX made an EW 5-wave decline from 8/16 at 4326 into 3965 on Tuesday – lower lows this week are likely. 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 made new lows for the week at $1730.8 but central bankers are loading up on gold this year and global physical inventories continue to decline.
- Stocks – The SPX summer rally appears to have peaked out on 8/16 at 4326. After a touch of its 200-dma, the SPX may have renewed its downtrend. The SPX may have finished an EW 5-waves down at 3965 and we could get a bounce early Wednesday but lower lows are likely by week’s end.
- Gold – Gold made lows for the week at $1730.8 this morning as the USD continues to hover around multi-year highs.
- Silver – Silver made multi-week lows at $18.225.
- Bonds – Bonds spiked down to 135’17 early Tuesday before bouncing. Rates continue to grind higher.
- Crude Oil – Crude oil dropped $7 Tuesday on fears of a Russian oil glut.
- Dollar Index – The USD hovers near yearly highs around $109.48 and this continues to pressure the PM sector.
TURNING POINT DAY
The turn window for this week is 9/2 which is the NFP jobs report.
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