Folks,
Market Observations for the Week: The SPX tested 3900 at 11:00 AM EDT and then reversed higher testing 3970 late in the session and avoiding five declining days in a row. The big number of the week is the NFP jobs report early Friday and a weaker than expected number(+318,000) will be welcomed by the market. Today we were focused on the trading in AAPL which briefly broke 155 before reversing to 158 into the close. Bitcoin tested 19310 during the day before reversing higher to test overhead resistance at 20000 overnight – this is not bullish behavior. A weaker than expected ADP jobs report did not placate the market on Wednesday but maybe a weaker than expected NFP jobs report on Friday will. Crude oil plunged to test $86 before bouncing back to $88 overnight. Gold tested $1699 today before a bounce higher overnight as the USD broke higher to test 110 – highs for the year.
9/01/22 (Commentary for Thursday) The SPX tested lower lows at 3900 before reversing higher to test 3970 into the close. The bulls pushed the SPX higher in the last 15 minutes to avoid a fifth straight down day. This could still just be the B-Wave pullback of a 3-wave upside correction from 6/17 but how the SPX reacts to the NFP jobs report early Friday will set the tone. AAPL did briefly fake us out by briefly falling below 155 but it reversed higher impulsively to close near 158. Bitcoin tested lows for the week at 19310 but is still unable to bounce above resistance at 20000. 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 tested $86 today but bounced back to $88 overnight - fears of a global recession are taking center stage. Gold spiked lower to test $1699 before bouncing back above $1700 overnight. The USD broke higher to test 110 which is the high for the year and this pressured the PM sector. 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 3903 early Thursday – how the SPX reacts to a potentially weaker NFP jobs report on Friday will be key. 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 $1699 Thursday morning, but central bankers are loading up on gold this year as global physical inventories continue to decline.
- Stocks – The SPX may have finished an EW 5-wave decline into 3903 this morning. How the SPX trades after the NFP jobs report will set the tone.
- Gold – Gold is tested $1699 Thursday morning before bouncing – the strong USD is keeping a lid on gold.
- Silver – Silver tested $17.40 and made another undercut low.
- Bonds – Bonds spiked down to 133’04 early Thursday before bouncing. Rates continue to grind higher, especially the US 2-yr note.
- Crude Oil – Crude oil tested $86 on fears of a global recession.
- Dollar Index – The USD tested 110 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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