Folks,
Market Observations for the Week: The SPX has corrected into the Tuesday after a monthly option expiration which is a turning point in our work. Monday was a quiet day in the markets, but we are expecting more corrective action by late Tuesday or early Wednesday. Crude oil may have bottomed in the New Moon last week and got a boost from the Saudi production cuts. Gold bounced today after giving us a 3-wave rally into last Thursday's New Moon - we are still looking for one more corrective leg down into the May 2-3 Fed meeting. The USD bounced from support at 100 - if this bounce turns impulsive it could pressure gold for another leg down.
4/24/23 (Commentary for Monday) We still favor more corrective action in the SPX this week as we enter the May time frame - we are watching $VIX and $VVIX closely for signals. We find the market too difficult to short here and so are looking for value areas like natural gas and wheat. Gold and silver started a correction last week and we got a 3-wave bounce into the 4/19-4/21 New Moon Timing Window for gold - this should give us another leg down this week in the PM sector. Our cycle work is calling the SPX below 3500 by June but the bulls are still in control. We still contend that the SPX market rally from October 13 is a Bear Market Rally that will make new lows in Q2 2023 - we are not in the "this is a new bull market camp" - the bank failures argue for a hard landing. Our Bear Market Time Window target in Q2 from the 20-yr cycle could take us for a test of SPX 3500 by June. We did not see a SPX capitulation or a VIX blow off in 2022 but do believe that lower SPX lows are due in Q2 of 2023 for the stock market. The China reopening after its Covid lockdown should be bullish for crude oil at some point – crude oil gave us just a corrective pullback to $77 in Friday's New Moon Timing Window which should give us a bounce.
Big Picture on Stocks (UPDATED) The latest black swan of bank failures could drive the 20-yr cycle to a test of SPX 3500 by June. The SPX could still give us a 20%-50% correction in 2023 as the 20-yr stock cycle low bottoms and the US economy slows into a recession.
Big Picture on PMs (UPDATED) – Gold gave us an all-time high monthly and end-of-quarter price in March - this is a Sign of Strength - if gold can hold above $1900 going into the May 3 Fed statement, we could see another test of the highs. Central bankers loaded up on gold last year and global physical inventories continue to decline but higher nominal US rates could still pressure the PM sector down one more time into Q2 2023.
Stocks – The SPX started a correction last week - we could see a 100 point SPX pullback going into the May Fed meeting - Big Tech earnings this week will determine the extent of the correction. Market breadth has been deteriorating but the bulls are still in control. However, Thursday did give us a lower high and a lower low day in the SPX.
Gold – Everybody seems bullish on gold here and that concerns us and the 3-wave bounce into the New Moon argues for another leg down this week.
Silver – Silver stocks are trying to lead silver lower - another leg down is possible this week.
Crude Oil – Crude oil corrected to $77 last week into Friday's New Moon - we are looking for a rebound in the coming week.
Dollar Index – The USD found support near 100 and could bounce more this week.
TURNING POINT DAY
The turn window for this week is 4/24-4/25.
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