Folks,
Market Observations for the Week: Both the QQQ and SPY blew off into the 6/2-6/5 Full Moon Timing Window and then gave us just an EW a-b-c correction into Wednesday/Thursday. We have argued that the QQQ and SPY could make new highs into the 6/18 New Moon. However, the AAII sentiment poll that came out today argues that the "wall of worry" about the stock market has dissolved - the 6/7 bullish % jumped from 29% to 44% and the bearish % shrank from 39% to 24%. Bullishness could extend further into > 50% in the next few weeks. We could see both the QQQ and SPY both make higher highs on Friday but we have to contend with the back-to-back SPX sell signals from the VIX/Bollinger Band model this week. Money also rotated into the XLE with both XOM and CVX pushing higher to highs for the week. We were 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. The XLE outperformed crude oil again on Thursday and may be trying to rotate into a leadership position. The USD is coiling for a possible retest of 104.7 by next week.
6/8/23 (Commentary for Thursday) The QQQ and the SPX are both poised to make new highs for the year on Friday but back-to-back SPX sell signals from the VIX/Bollinger Band model keeps us cautious. The rapid rebalancing of the AAII sentiment survey from last week to the bullish view is a sign that the "wall of worry" that has kept the SPX elevated is cracking. Larry Williams cycle work has the SPX peaking in the first 5 days of June and then selling off into August - we would need a hard down day in the SPX on Friday to bring this viewpoint to the front and center. 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 on 6/18. 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 such a religious following unless there is a compelling setup. Our Bear Market Time Window target may need to be shifted into Q3 for the 20-yr cycle which could take us for a test of SPX 3500 by late July. 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 is giving us a difficult chart but the price action in XOM and CVX shows positive money inflows. The USD made multi-week highs last week at 104.7 before a 3-wave correction which has us looking for a retest of 104.7 by next 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 rebounding to $1980 Thursday 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 – The SPX and QQQ gave us just a 3-wave pullback from Monday and may have started a move to higher highs for the year today.
Gold – Gold pulled back to $1961 early Monday but then bounced back again to $1980 on Thursday.
Silver – The shutdown of a Newmont Mexican mine gave silver a large move today which tested its R2 resistance pivot at $24.41.
Bonds – Bonds bounced to test its R1-resistance pivot at 127'24 before correcting.
Crude Oil – Crude oil has a difficult chart but XOM and CVX are gaining from money rotation.
Dollar Index – The USD tested 104.7 last week and gave us a 3-wave pullback - looking for a retest of 104.7 by next week.
TURNING POINT DAY
The turn window for this week is 6/5-6/6.
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