Folks,
Market Observations for the Week: The SPX, NDX and IWM all gave us a Positive Volume Reversal Day today and the market is rallying into Friday's PCE inflation report which should be a catalyst. The Option Premium Ratio dropped from 0.52 to 0.45 which is short-term bullish. The pattern from the 1/24 SPX high is not completely clear and could be tracing out a bullish coil on the hourly chart. The SPX survived another "hawkish pause" from the Fed and the earnings reports from MSFT, TSLA, and META without the E-Mini giving us anymore than a 0.382 retracement of the Monday to Wednesday rally - this opens the door to some short-term bullish possibilities. The first year of the Presidential cycle correlates with stock market volatility in 2025 and we could see multiple corrections of 15% in a volatile year as the new US administration settles into power. Gold broke out to a new ATH at $2859 overnight Thursday and silver broke out above an intermediate downtrend line - we are very bullish on silver. We are still holding our FXI position and like it longer term as a hedge against the US stock market going into Q1 2025 - competition from Chinese tech could level the playing field in AI. Our current positions average 55% cash and 20% physical gold, silver, platinum. We have a 25% allocation to our trading account which is now allocated to SLV, CDE, and AG as of this morning.
1/30/25 (Commentary Thursday) Our bias is changing to short-term bullish the SPX and OEX. The price action in the E-mini could be tracing out a bullish coil from 1/24 which could see another test of the ATH. The SPX. NDX and IWM all gave us POSITIVE VOLUME Reversal Days today which is short-term bullish going into Friday's PCE inflation report. The SPX had a chance to reverse down hard in a Wave C down early Thursday, but the stock market got bought. The continued "hawkish pause" from the Fed and the earnings reports from META, MSFT and TSLA failed to give us more the a 0.382 retracement from the early Wednesday high. The bond market finished an EW a-b-c decline on Wednesday and is sub-dividing up. We have discounted the quasi-bullish Zweig Breadth Thrust indicator signal from last week because it did not decline < 0.30 before rallying > 0.60 last week - but this could still be a bullish signal in the short-term. Our bias is to expect big SPX volatility in 2025 that is tradable - we are looking for a year like 2022 which saw multiple > 15% corrections in the SPX. We urge traders to raise at least 50% cash for a volatile two-way market in 2025.
Big Picture on Stocks (UPDATED) Our bias is shifting to short-term bullish but the PCE inflation report needs to come in market friendly early Friday. The SPX gave us a Positive Volume Reversal Day on Thursday and that broke us out higher from Wednesday's "inside day".
Big Picture on PMs (UPDATED) Gold broke out to a new ATH at $2859 on the April contract- The Moon ingressed into Aquarius on Wednesday and that correlates to a possible important turn in the PM sector by Friday.
Stocks – The SPX broke out higher above Wednesday's "inside day" - how the market reacts to the PCE inflation report early Friday will set the short-term trend.
Gold - After 5- waves up yesterday to test its ATH, gold impulsed up Thursday to make another ATH at $2859 overnight.
Silver – Silver is breaking out to test $33 overnight Thursday and a fast move higher above $35 is possible going into February.
Bonds – Bonds finished an EW a-b-c correction on Wednesday and sub-divided higher.
Crude Oil – Crude oil pulled back to test $72.11 into the 1/28-1/30 New Moon Timing Window.
Dollar Index – The USD is coiling around 108 overnight Thursday.
TURNING POINT DAY
The turn windows for this week are 1/26 and 1/29.