Folks,
Market Observations for the Week: The SPX gave us another down day with greater volume and weakness across many market sectors and another close below its 50-dma. The SPX may have finished a Wave 1 of 3 of C down with a Wave 2 of 3 of C into the close. Our bias is for an early bounce on Thursday followed by another leg down below SPX 4350. We are short-term bearish here and bought some SQQQ and SPXS yesterday for a sell on a big down day - perhaps tomorrow. The NDX gave us a Negative Volume Reversal Day down today and AAPL appears to be leading Big Tech down. The SPX made a short-term high in the 8/30-9/1 Full Moon Timing Window which also includes the orb from the 8/28 3-star critical reversal day. The VIX continued to rally on Wednesday though many traders appear to be shorting the VIX - the VIX has a technical target of 19.4. In our view, the rising crude oil price and the higher than expected PCE inflation report on 8/31 adds to the weight of evidence that inflation forces have finished their corrective decline and are building for their next leg up which will be led by gold, silver, bitcoin, crude oil, natural gas and uranium this fall. If rising rates force a big stock market break in September, commodities will also be hit and we will favor gold, silver, crude oil and natural gas on dips. Gold gave us a 3-star critical reversal day on 8/28 and made a short-term high on its test of $1980. Crude oil tagged $88.08 Wednesday while the XLE continued to correct. The GDX gave us a key reversal day on 8/21 and rallied to test its 50-dma on 8/30 before declining - this looks like an important top. 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. Our current positions are 5% natural gas (UNG), 10% gold and silver stocks, 65% cash and 20% physical gold, silver and platinum.
9/06/23 (Commentary for Wednesday) The SPX continued down on Wednesday and the volume increased as the NDX gave us a Negative Volume Reversal Day down. We are still counting the SPX rally from 8/18 as a B-wave that completed in the 8/30-9/1 Full Moon Timing Window. The SPX 3-star critical reversal day fell on 8/28 but its orb expanded into 9/1 as a high. The Mercury retrograde mid-point on 9/4 is reversing the SPX and NDX down and validates the possible 55-day crash pattern in the NDX. The Option Premium Ratio jumped from 0.36 to 0.46 on Wednesday and shows an increase in put buying - a break above 0.51 is necessary to further confirm a potential crash pattern in the NDX and SPX. 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. 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. 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 $1900 will keep gold in a bullish "wave 2" pullback pattern. The GDX rallied in a B-Wave from 8/21 into 8/30 when it tested its 50-dma - this looks like an important high. 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 8/11 argues that the second wave of inflation may be starting and the PCE inflation report early8/31 validated this - the Fed may hold rates higher for longer and shatter the "soft landing of the economy" that traders are expecting. The USD tested 105.1 early Wednesday and could have made an important high.
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. We saw a SPX trading high early 9/1 in the orb of the 34-day Fibonacci step out from the 7/27 SPX high and the orb of the 8/28 3-star critical reversal day.
Big Picture on PMs (UPDATED) Gold may have seen a short-term high on its test of $1980 early 9/1. The GDX may have peaked a B-Wave high on 8/30. We are close to a major reversal higher by October.
Stocks – The SPX appears to have made a B-Wave rally high in the 8/30-9/1 Full Moon Timing Window and a 3-star critical reversal time window. The SPX continued down on Wednesday with greater volume and closed below its 50-dma.
Gold – Gold tested our $1980 target post-NFP on early Friday and may have printed a short-term high in the orb of its 9/28 3-star critical reversal day. If gold can hold above $1900, we are expecting a big rally to start in September/October. We have stink bids in for some of our favorite junior gold/silver miners which may be making multi-year lows in September/October.
Silver – Silver tested its S2-support pivot at $23.32 on Wednesday and bounced.
Bonds – Bonds may have given us a 5-wave down move from 121'27 to 118'25 on Wednesday.
Crude Oil – Crude oil tested $88.08 on Wednesday as the XLE continued to correct.
Dollar Index – The USD tested 105.1 today and may have put in a top.
TURNING POINT DAY
The turn window for this week is 9/4.
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