Folks,
Market Observations for the Week: The SPX did make at least a short term high on Monday at 4188 but we only got a 3-wave correction into Tuesday’s close. Since we are in the orb of the 8/9 3-star critical reversal day, we are open to an important high being made this week. The CPI report early Wednesday should set the tone for the rest of the week. Crude oil tested $92.46 on Tuesday but the tagging of $87.01 on Friday could have been an important low. Gold managed to test $1817 today heading into the CPI inflation report. The USD is coiling sideways going into the CPI report early Wednesday.
8/09/22 (Commentary for Tuesday) Just a 3-wave correction from Monday’s high in the SPX leaves open the possibility of a higher high in the SPX after the CPI report. The SPX tested the 4188-4200 resistance area before turning down on Monday and its possible that a favorable CPI report could give us a run up to tag 4200. However, our Option Premium Ratio gave us a SELL SIGNAL on 8/4 and the SPX held up into the orb of the 3-star critical reversal day on 8/9, so bulls should not have been greedy here. Bonds may be tracing out a Running B-Wave continuation pattern to the downside and may be sniffing out a hotter-than-expected CPI report Wednesday. Crude oil tested $92.46 before reversing down today – the test of $87 last Friday could have been an important low. Gold tagged $1817 today going into the CPI report and the USD is coiling sideways into Wednesday. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – The SPX only gave us a 3-wave correction going into Tuesday’s close and that leaves open the possibility of a test of SPX 4200 after the CPI report tomorrow. 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 is rallying impulsively from $1678 to $1817– just a 3-wave correction after the CPI report would be short-term bullish.
- Stocks – Our Option Premium Ratio gave us a SELL SIGNAL for the SPX on Thursday but we have only gotten a 3-wave pullback so far going into Wednesday. How the market responds to the CPI report early Wednesday will set the tone for the rest of the week.
- Gold – Gold continued to sub-divide higher into $1817 going into Wednesday – just a 3-wave correction after the CPI report would be bullish.
- Silver – Silver spiked to $20.74 on Monday and just pulled back slightly into Tuesday.
- Bonds – Bonds may be giving us a Running B-Wave correction to the downside which is a sign of weakness.
- Crude Oil – Crude oil tested $92.46 on Tuesday but the tagging of $87 on Friday could have been an important low.
- Dollar Index – The USD is coiling sideways into the CPI report.
TURNING POINT DAY
The turn window for this week is 8/8-8/9.
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