We are still on travel with limited access to the internet, so our reports will be brief.
Folks,
Market Observations for the Week: After a brief rally attempt early in the session, the SPX continued to subdivide down as we approach the NFP jobs report early Friday, The 21-day Fibonacci step out may have either already come in as the HIGH after the Fed statement yesterday or will come in early tomorrow if the NFP jobs report comes in cooler than expected and the SPX gets an undercut low. Bitcoin held above 20000 again today which is a positive for the market. 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 SPX failed give us a strong reversal early Thursday and instead continued to subdivide down in bearish fashion. Tomorrow is the NFP jobs report, and we could see a reversal higher early on a weaker than expected report - if not, the SPX could fall into next week's 3-star critical reversal day.
Gold – Gold gave us an undercut low to $1618 early Thursday and then bounced to $1635 - a stronger than expected NFP jobs report would pressure gold back down to test weekly lows.
Silver – Silver bullishly diverged from gold and held above its recent lows, but the silver stocks look weak.
Crude Oil – Our view remains that the OIH (oil service) stocks are leading crude oil higher for its next leg higher - if the SPX continues its decline into next week's 3-star critical reversal day, we will be inclined to buy SLB or XOM on dips.
Dollar Index – The USD has only given us a 3-wave correction from 10/20 - we could test the recent highs near 114 by next week.
TURNING POINT DAY
The turn window for this week is 11/4, the NFP jobs report.
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