We are still on travel with limited access to the internet, so our reports will be brief.
Folks,
Market Observations for the Week: The Fed raised the FFR by 75-basis pts. as expected but Powell's hawkish rhetoric broke the SPX down below SPX 3800 into the close. The 21-day Fibonacci step out from 10/13 falls early tomorrow and the bulls need a sharp reversal higher early Thursday to reverse the bearish tone from late Wednesday. Bitcoin held above 20000 during Fed day which is a positive. The market now is looking for the NFP jobs report early Friday and a stronger than expected jobs creation number could further pressure the SPX.
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 – The Fed gave us a 75-basis pt rate hike and a dovish sounding statement but when Powell started speaking, he sounded more hawkish as time passed and the SPX responded by falling into the close and closing below 3800. Tomorrow is the 21-day Fibonacci step out from the 10/13 low and we could see a reversal higher early - if not, the market could fall into next week's 3-star critical reversal day.
Gold – Gold bottomed at $1621 on 10/21, its 3-star critical reversal day, but the rally since looks corrective and leaves this market open to a retest of $1621.
Silver – Silver rallied in an EW 5-waves up from 10/14 into 3:00 pm today then started a correction.
Crude Oil – Crude oil sold off into the close, but 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.
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