Folks,
Market Observations for the Week: The SPX rallied up to 4008.97 Monday before falling back late into the close. We may have started a 4th wave into the 11/16 turn window and traders may have gotten some advance notice of the PPI inflation numbers for early tomorrow. Just a 3-wave SPX correction into 11/16, the 34-day Fibonacci step out, would be a bullish setup for higher prices this week and perhaps a test of the 200-dms at SPX 4050. We did get a powerful turn in the 11/8-11/10 turn window, but we still believe that this is just a bear market rally that has lower lows to make in the intermediate term.
11/14/22 (Commentary for Monday) The SPX will be tested by the PPI inflation report early Tuesday and if the report comes in hotter than expected, we could see some early volatility. But, just a 3-wave pullback into the 34-day step out on Wednesday would be a bullish setup for a test of the SPX 200-dma around 4050. On Monday, the SPX overcame early fallout from the FTX bankruptcy to make higher highs around 4009 before falling into the close - numbers from the PPI inflation report may have been leaked early. Our EW interpretation of the rally from 10/13 is that we started a 3rd wave of C higher on Thursday of a large a-b-c bear market correction and we may have started a 4th of C corrective wave near the close today. After a 3-wave bounce on Thursday, Bitcoin appears to need an undercut low below 14925 going into Tuesday. Based on weak global demand estimates from OPEC, crude oil rolled over late today to test $85. Gold tested $1780 before rolling over to test its Person's pivot at $1769. The USD is correcting hard in a C-Wave down of an EW a-b-c correction - a break below 106.281 should end the C-Wave down.
Big Picture on Stocks (UPDATED) – The Thursday/Friday stock rally does not change our bias that the market rally from 10/13 is just a "bear market" rally. Longer term, the SPX could give us a 20%-50% correction by spring 2023 - down to SPX 2400 - as the 20-yr stock cycle low bottoms and the US economy slows into a recession. The 13-month Fibonacci step out from the 1/4/22 SPX 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 and global physical inventories continue to decline but higher nominal US rates could still pressure the PM sector down.
Stocks – The SPX tested new highs for the rally at 4009 before selling off into the close . did someone leak the PPI numbers before the close?
Gold – Gold tested $1780 on Monday as we have another solar-lunar Big Range Day.
Silver – Silver tested its R1 pivot resistance at $22.19 before pulling back late.
Crude Oil – Crude oil tested $85 on weak demand estimates from OPEC.
Dollar Index – The USD is coming down hard in a C-Wave that could still undercut 106.28.
TURNING POINT DAY
The turn window for this week is 11/16 - the 34-day Fibonacci step out from the 10/13 low.
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