Folks,
Market Observations for the Week: The SPX tried to bounce for most of Friday but ended the day making lower lows. The 21-day Fibonacci step out from the 9/1 high ideally falls on Friday/Monday. Because of the weak close on Friday, the SPX may give us a gap-down open on Monday. The minimum target for a C-Wave down from 9/1 would be around SPX 4260 or QQQ 352. Based on watching CNBC and the order flow of options, Friday was not a panic day - we could see more selling into Friday/Monday - Sell Rosh Hashanah/ Buy Yom Kippur may be working out this year which means that we could sell some more of our TZA, SQQQ SPXS shares on Monday and add a few long plays for a quick trade. The dip buyers have not panicked yet as the 10-yr US rate continues to creep higher. From 9/1, the SPX gave us an EW 5-waves down into 9/7 and then just a 3-wave bounce into 9/14 which was a New Moon - from the 9/15 low the SPX gave us just a corrective bounce into 9/18 and then a Wave 3 of C lower into Friday before a Wave 4 bounce that reversed down near the close. The SPX took out the August low and is approaching a "demand zone" near 4300 from which it could bounce early Monday. Crude oil gave us 5-waves down to test $88.37 and then a 3-wave corrective bounce to $91.31 before rolling over. The USD tested 105.56 Friday morning and and gave us a 3-wave correction. Bonds bounced from Friday and is testing 116'22 Sunday evening - the 10-yr US rate tested 4.48% Friday, a multi-month high, and continues to pressure stocks. Gold bounced to test $1949 on Friday after a "running B-Wave down" to $1933 - we're looking for a move below $1933 on Monday/Tuesday. The bearish SPX 1-2, i-ii count is being validated by the Wed/Thur price action - we could see more down to SPX 4260-4300 on Monday/Tuesday. We prefer to remain 75% in cash that is paying us a risk-free 5% while using small amounts of funds to trade good setups and accumulate SQQQ and SPXS on market rallies. Our current positions are 5% natural gas (UNG), 5% SPXS, 70% cash and 20% physical gold, silver and platinum.
9/24/23 (Commentary for Sunday) The bearish SPX EW 1-2, i-ii count was validated Wednesday after the FOMC minutes and ran down to lower lows on Friday - more down to 4260-4300 is possible on Monday/Tuesday. Since we are in a Wave 3 of C down, we could see more subdivision down before a retracement bounce on Monday/Tuesday. Friday was a good day to sell more SQQQ and SPXS shares but Monday/Tuesday could give us better opportunities before a retracement rally. The large Spiral Time Cluster indicated a significant market high in the 6/23-6/27+ 1 month timeframe and we believe that the late July highs in the NDX and SPX are following this time cluster down - but the Fall lows may be extended into October/November. Dip buyers continue to buy tech stocks on dips and haven't panicked yet about rising rates - this could happen soon. We have limited short positions to 1.5% of our portfolio and maintain as much cash as possible for an important SPX low in September/October. Since we have a solar and lunar eclipse in October, we may not see panic downside moves until then - the dip buyers of technology stocks are still going strong. The last three years in gold resembles the basing in the SPX from 1980-1982 before the big lift off in August 1982. Staying above $1913 will keep gold in a bullish "wave 2" pullback pattern, but gold tested its S2-support pivot at $1933 Thursday on rising rates and a spiking USD. We're planning to remain in mostly cash and wait for extreme bargains to appear in our favorite sectors(such as junior gold/silver and uranium miners) into September/October. We believe that investors are too dovish on US rates going into Q3 and stocks are vulnerable to more interest rate shocks - the PPI report on 9/14, and the CPI on 9/13 argues that the second wave of inflation is starting and the PCE inflation report early 8/31 validated this. Chairman Powell sounded hawkish on Wednesday and his "higher for longer" message may have finally got through to many traders who are expecting an easing of interest rate policy before year end.
Big Picture on Stocks (UPDATED) The US debt downgrade and global rise in long rates should magnify the SPX and NDX decline into September/October. The SPX confirmed the bearish EW 1-2, i-ii count after the FOMC minutes today and could continue lower into Monday/Tuesday.
Big Picture on PMs (UPDATED) Gold made a short-term high on its test of $1980 early 9/1. Gold tested $1970 early Wednesday and declined to test $1933 on Thursday before rebounding to $1949 on Friday.
Stocks – The SPX confirmed a bearish EW 1-2, i-ii count after the FOMC minutes on Wednesday - the corrective 3-wave bounce early Friday rolled over to lower lows into the close. We could test the SPX 4260-4300 zone on Monday.
Gold – Gold ended an EW a-b-c bounce today by testing $1970 before rolling over to test $1933 Thursday and then a bounce to $1949 on Friday - we could see another test of $1933 on Monday/Tuesday. We have stink bids in for some of our favorite junior gold/silver miners which may make multi-year lows into September/October.
Silver – Silver is testing $23.80 Sunday evening.
Bonds – Bonds are bouncing to 116'22 Sunday evening.
Crude Oil – Crude oil pulled back in 5-waves to test $88.37 and is now bouncing higher in a 3-wave bounce that tested $90.16 Sunday evening.
Dollar Index – The USD tested 105.74 early Friday and then started a 3-wave correction into SUnday evening.
TURNING POINT DAY
The turn window for this week is 9/25-9/26.