Folks,
Market Observations for the Week: The CPI report came in hotter than expected early Tuesday and the SPX had its biggest down day since 2020. Our TRIN-5 SELL SIGNAL and Option Premium SELL SIGNAL came home to roost in a big way. The “inflation has peaked” crowd really took it on the chin today. The PPI inflation report comes in early Wednesday and could give us another volatile day in this quad-witching week. The Option Premium Ratio dropped dramatically from 1.51 to .89 which showed that traders bought call options looking for a bounce higher on Wednesday after today’s extreme sell off. The USD gave us a strong corrective bounce higher that tested 110.
9/13/22 (Commentary for Tuesday) The SPX rallied into the Full Moon Timing Window and into Tuesday’s early CPI report. Sell signals from our TRIN-5 indicator and Option Premium Ratio indicator came in and gave us one of the biggest down days since the 2020 Covid selloff. Hotter than expected CPI numbers sent the SPX back to test support at 3906. The PPI inflation report early Wednesday has the ability to rally the SPX hard if the numbers are cooler than expected – that is our expectation. Crude oil pulled back to test $85 today before reversing higher to test its Person’s Pivot at $87.44 overnight Tuesday. After the 10-yr US rate spiked to 3.46%, gold was pressured down to test $1706. The USD gave us a strong rebound rally that tested 110. Our current holdings are ~80% cash and ~20% in physical gold/silver/platinum.
Big Picture on Stocks (UPDATED) – AAPL gave up a huge $7+ today as over-confidant traders took their losses on the hotter-than-expected CPI report. 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 tagged $1747 on Monday but then came back down on Tuesday to tag $1706. Central bankers are loading up on gold this year as global physical inventories continue to decline but higher nominal US rates can still pressure the PM sector down.
- Stocks – Today’s hot CPI report shocked the market into one of its biggest losing days since the 2020 Covid sell off and the SPX fell to test support at 3900. A cooler than expected PPI report early Wednesday could give the SPX a huge relief rally in this volatile quad-witching week.
- Gold – Gold finished an EW a-b-c correction late Monday and reversed down to test $1700 again after the hot CPI report.
- Silver – Silver pulled back to test $19.23 in what appears to be a 3-wave correction.
- Crude Oil – Crude oil pulled back to test $85 before bouncing overnight to test $87.44.
- Dollar Index – The USD gave us a furious corrective bounce to test 110.
TURNING POINT DAY
The turn window for this week is 9/12-9/13.
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