Folks,
Market Observations for the Week: To us the tape looked weak today and we saw that the IWM peaked on Tuesday and gave us an EW 5-wave decline. We have an alternate count that the SPX made a 5th wave high at 4028.84 on Tuesday as well. Also, our Option Premium Ratio gave us a multi month low(0.59) on Monday before the rally high of SPX 4028.84 on Tuesday - this is the same pattern that we saw on 8/15 when the Option Premium Ratio gave us a multi-month low (0.50) the day before the SPX made its rally high at 4325 on 8/16 - we view this AS A MAJOR SELL SIGNAL The SPX also made its high in the orb of the 34-day Fibonacci step out on Wednesday. We have turned bearish and have exited our small long position. The USD and the 10-yr US rate have both only given us a 3-wave decline and appear to be reversing higher here.
11/17/22 (Commentary for Thursday) We have turned bearish on the market and exited our small long position this morning. Our Option Premium Ratio gave us a SELL SIGNAL on Tuesday and the IWM(Russell 2000) gave us a 5-wave decline from its Tuesday high. Our alternate EW count that the SPX made its 5th of C high at 4028.84 on Tuesday is now our primary count. The IWM appears to be rolling over and today was a very negative breadth day for the NYSE. After a 3-wave bounce into Thursday, Bitcoin appears close to rolling over - an undercut low below 14925 is likely by Monday. Crude oil is rolling over and its H&S pattern on the hourly chart is the controlling pattern and predicts a move to $75. Gold spiked to $1791 on Tuesday but is being pressured lower by a rising USD. The USD finished a 3-wave correction to 105.34 on Tuesday and is coiling for a reversal higher.
Big Picture on Stocks (UPDATED) – The SPX may have peaked on Tuesday at 4028 as we got an Option Premium SELL SIGNAL on Monday. 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 – More fallout from the crypto meltdown pressured the SPX this morning - we got a Major SELL SIGNAL on the SPX on Monday and are getting defensive.
Gold – Gold tested $1791 on Tuesday before hard as the USD turned up.
Silver – Silver tested $22.38 but was pressured down to $20.77 on Thursday by a stronger USD.
Crude Oil – Crude oil is rolling over bearishly and is targeting $75 from its H&S pattern on the hourly chart.
Dollar Index – The USD completed a 3-wave correction at 105.34 early on 11/15 and is coiling for a rally leg.
TURNING POINT DAY
The turn window for this week is 11/16-11/17 - the 34-day Fibonacci step out from the 10/13 low.
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