Folks,
Market Observations for the Week: The SPX continued its correction today did not bounce into Powell's speech on Wednesday that like we expected. The market may not be expecting any dovish statements from Powell Wednesday afternoon. Our short-term bias is for an EW a-b-c correction into Friday's NFP jobs report or the 12/7 Full Moon. The NFP jobs report on early Friday will be an important data point for the market - weaker than expected jobs creation should generate a rally. Monthly seasonality typically brings the SPX back into the NFP report and hawkish words from Powell may accomplish this. Because of the extent of the market pullback, our bias has changed for lower DJIA and SPX prices into 12/2-12/7 which is close to our next 3-star critical reversal day on 12/6. The closing spike of the CBOE equity put/call to 1.36 last Wednesday is another "bearish excess" data point that keeps us looking for higher levels in the SPX and DJIA into 12/14. The SPX will likely test its 200-dma or its downtrend line from the 1/4/22 high before the rally from 10/13 tops out somewhere between 12/8 and 12/14 and we are just sitting on our hands here. This market is very treacherous to trade and we need to see an EW 5-waves down on the hourly chart before we consider a small short position. After giving us an undercut low to $73.6, crude oil bounced to test $79 - hedge funds are heavy on the short side of energy stocks here and could be run out if the price of crude gets a lift. Bitcoin is spiking to its R2 resistance pivot at 16723 Tuesday night but we still have our December target below 10000. The USD appears to be giving us just a 3-wave corrective bounce into Tuesday so far but Powell's comments on Wednesday will give us some volatility.
11/29/22 (Commentary for Tuesday) The DJIA and SPX made their highs for the week on Friday into the 11/23-11/25 New Moon Timing Window and on Monday they started a 3-wave correction that could continue into the NFP jobs report on Friday or the 12/7 Full Moon. If the E-mini does give us an EW 5-waves down on its hourly chart followed by just a 3-wave bounce, we will consider this a SELL SIGNAL and will look to short. The SPX could now give us a bounce into Powell's public comments on Fed policy on Wednesday and then trace out an EW a-b-c into Friday's NFP jobs report. The SPX and DJIA both made higher highs after the 34-day step out from 10/13 on 11/16 which is bullish for higher prices going into 12/14. Bitcoin is spiking Tuesday night and that is bullish for early SPX strength on Wednesday. Crude oil rallied in 5-waves and is testing $79 Tuesday night - hedge funds have gone heavily short energy stocks recently which could backfire if crude oil can keep rallying. Gold bounced back on Tuesday and is starting to coil - Powell's comments on Wednesday could bring volatility - gold has a monthly tendency to decline into the monthly NFP jobs report this Friday. The USD gave us an EW 5-wave down on the hourly chart into early Monday and then only a 3-wave bounce into Tuesday evening - this could be a bearish signal.
Big Picture on Stocks (UPDATED) – Our market bias is that the SPX could hold up into mid-December or 12/8-12/14. Even so, the SPX could still 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 – Both the DJIA and SPX have taken out their respective highs from 11/15 as they rallied into the 11/23-11/25 New Moon Timing Window. The SPX declined into early Tuesday and only bounced correctively - this looks bearish for more decline. How we trade on Wednesday is key.
Gold – Gold rallied back on Tuesday but still has a tendency to pull back into Friday's NFP jobs report.
Silver – Silver started to coil late on Tuesday as the USD bounced correctively. Silver has a tendency to pull back into Friday's NFP jobs report.
Crude Oil – Crude oil tested $73.6 Monday before reversing higher to test $79 - hedge funds are heavily short the energy stocks here.
Dollar Index – After 5-waves down on the hourly chart into early Monday, the USD only bounced correctively into Tuesday and this looks bearish.
TURNING POINT DAY
The turn window for this week is 12/02 on the NFP jobs report.
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