We are still on travel with limited access to the internet, so our reports will be brief.
Folks,
Market Observations for the Week: The market expects a 75-pt FFR increase on Fed Day tomorrow. If the SPX is only pulling back in a 3-wave decline that holds above SPX 3800 by Wednesday's close that will be bullish for a short-term trade. A decisive break below 3700 by Thursday morning will be bearish,
Big Picture on Stocks (UPDATED) – Longer term, the SPX could give us a 20%-50% correction by spring 2023 - down to SPX 2400 - as the 20-yr cycle low bottoms and the US economy slows to a recession. The 13-month Fibonacci step out from the 1/4/22 high and the 55-wk Fibonacci step out have us looking to early February for an important low. We favor a high percentage of cash for capital preservation.
Big Picture on PMs (UPDATED) – We still expect gold stocks to test their COVID lows by Fed/March 2023 as the 8-yr gold cycle and the 20-yr stock market cycle converge on the downside. 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 – Our bias is for a typical pullback into the Fed-day on Wednesday. If all we get is a 3-wave pullback by the close Wednesday, this is bullish for a run to SPX 4000+ by next week.
Gold – Gold bottomed at $1621 on 10/21, the 3-star critical reversal day, but the rally since looks corrective and leaves this market open to a retest of $1621.
Silver – Silver made highs for the week today and looks stronger than gold especially with the SIL (silver stocks) trying to lead higher.
Crude Oil – Crude oil sold off on Friday but strength in the OIH(the oil service stocks) suggests that we started a new upleg higher.
Dollar Index – The USD has given us just a 3-wave correction into today - we could still test the recent highs at 114.
TURNING POINT DAY
The turn window for this week is 11/2-11/3.