Folks,
Market Observations for the Week: The NDX and SPX made highs in the 6/7-6/8 turn window and we may have started a typical pullback into the 6/13 FOMC rate hike decision. Similar to the 1/26-1/29 time window, our option indicators(the Option Premium Ratio, the 5-day all-exchange put/call MA, etc.) are on sell signals. The NDX is leading the market down in a correction that could run into the 6/13 FOMC rate hike decision.
6/10/18 (Commentary for Sunday) Both the SPX and NDX finished a 5-wave rally on the daily chart into the 6/7-6/8 turn window and the market appears to be poised for a correction into the FOMC rate hike decision on 6/13. With fallout after the G-7 meeting on Sunday night, the NK summit on Tuesday, the FOMC rate hike decision on Wednesday, and the ECB statement on QE on Thursday, global markets have a lot to digest this week. US markets ended last week on "option indicator" sell signals similar to the 1/26-1/29 turn window and this keeps us on the caution side. A 5-wave decline on the hourly SPX or NDX will indicate something bigger is at work on the downside. Trump's disruption of the post-WWII world order may give markets a pause this week. Crude oil hit our target price of $64 and gave us just a weak rally into Friday - this is bearish. Gold rallied 5-waves higher on the hourly chart into Wednesday and gave us another a-b-c pullback into Thursday - we are looking for a rally into Monday. The USD is declining impulsively on the hourly chart, and this could provide a significant post-FOMC bounce for the PM sector.
·Big Picture on Stocks (UPDATED) - The SPX may be starting a pullback into the 6/13 FOMC meeting. A 5-wave decline on the NDX hourly chart may indicate a more serious pullback.
·Big Picture on PMs (UPDATED) - Gold declined in 5-waves on the daily and weekly chart from the April high at $1369 to $1281 on 5/21 - we're looking to buy dips in GLD calls going into the 6/13 FOMC rate hike decision for a rally back to the mid-$1300s.
- Stocks - Both the SPX and NDX may have finished EW 5-wave rally advances into the 6/7-6/8 turn window as our option indicators go on sell signals similar to the 1/26-1/29 turn window which started a four month correction. We have turned cautious for this event-filled week. Watch the $VIX for a potential breakout.
- Gold - Gold corrected in 3-waves from Wednesday's high - we're looking for a rally into Monday - we are holding GLD calls.
- Silver – Silver made a low in the 6/4-6/6 turn window and is leading gold higher - this is bullish.
- Crude Oil - Crude oil finished a 5th wave decline at $64 but only managed a weak bounce into Friday - bearish.
- Bonds - Bonds may have started a flight-to-quality rally on Friday.
- Dollar Index – The USD has fallen in 5-waves on the hourly chart and the Euro may have made a major low - this is bullish for the PM sector.
TURNING POINT DAY
The turn windows for this week are 6/7-6/8 and 6/13 - the FOMC rate hike decision.