Folks,
Market Observations for the Week: The stock market blew off into the Full Moon Timing Window which by our work allows us more rally potential into the next New Moon on 6/18. Most impressive to us was the large Positive Reversal Day in the IWM - money appeared to be rotating out of tech stocks into KRE (regional banks) and the KBE - this could be a fake out move. The QQQ appears to be tracing out an EW a-b-c correction with a C-Wave down to 350.5 or so a potential target. We had expected more money rotation into energy stocks (XLE) but today we observed Negative Volume Reversal Days in both XOM and CVX and this has kept us from chasing the oil stocks - the uranium stocks may be a different matter. We are now focusing on a pullback into Tuesday/Wednesday for the QQQ and SPY and expect a retest of highs in the SPY AND QQQ by Friday. Crude oil spiked to $75 on the back of the OPEC news Sunday evening but then proceeded to give up the gains during Monday's session - we are skeptical of the energy sector here. Crude oil only gave us a 3-wave rally into the Full Moon Timing Window - this argues for an undercut of $67. Gold bounced to $1980 on Tuesday after making a low on the weekend Full Moon. With just a 3-wave pullback, we are looking for a possible retest of 104.7 by Wednesday/Thursday.
6/6/23 (Commentary for Tuesday) We got a clean 5-waves down from AAPL after it announced it's pricy new headset on Monday, got a weak corrective bounce on Tuesday and now expect AAPL to lead us in a C-Wave down into Wednesday. Larry Williams cycle work has the SPX peaking in the first 5 days of June and then selling off into August - Jim Cramer is telling his followers to lighten up on their holdings. A blow off into a Full Moon usually gives us a pullback in a day or so but keeps the market bullish into the following New Moon in mid-June. Our "Sell in May and walk away" idea did not work out but the current market action feels like a final blow off that has more to go. We do believe that NVDA and AAPL are at crazy valuations but we do not believe in shorting those stocks with a religious following unless there is a compelling setup. Our Bear Market Time Window target in Q2 for the 20-yr cycle which could take us for a test of SPX 3500 by late June seems to be too early - this week's trade will help to clarify it. We did not see a SPX capitulation or a VIX blow off in 2022 but do believe that lower SPX lows are due by Q3 of 2023 for the stock market. Crude oil gave us a test of $75 Sunday evening but gave up its post-OPEC gains on Monday - this is a sign of weakness. The USD made multi-week highs Wednesday at 104.7 before a 3-wave correction into Friday which has us looking for a retest of 104.7 this week. Our current positions are 5% natural gas and wheat, 75% cash and 20% physical gold, silver and platinum.
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 August - the plunging money supply has us looking for a sharp turn down soon. 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 is holding at $1981Tuesday evening - a break below $1955 would be bearish. 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 late Q2 2023.
Stocks – AAPL's product announcement was a "sell the news" event on Monday and the markets sold off into the close. We are looking for AAPL to lead the QQQ into a C-Wave down into Wednesday with a symmetry target of QQQ 350.5.
Gold – Gold pulled back to $1961 early Monday but then bounced to $1981 Tuesday evening.
Silver – Silver stocks are trying to lead silver higher.
Bonds – Bonds bounced to 128'10.
Crude Oil – Crude oil spiked into Sunday evening and tested $75 - however, the gains were given up during Monday's session - this is bearish to us.
Dollar Index – The USD tested 104.7 Wednesday and gave us a 3-wave correction into early Friday - looking for a retest of 104.7 this week.
TURNING POINT DAY
The turn window for this week is 6/5-6/6.
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