Folks,
Market Observations for the Week: From early Wednesday, the SPX has traced out a sideways pattern into Friday's close. The SPX did test our target of 4563 Friday but failed to break down. The Friday after Thanksgiving has very positive seasonality and held up into the close. NVDA had a good earnings report but declined $12 on Wednesday - the bulls still kept the QQQ up which is short-term bullish. The bears again had a chance to take the market down on Friday but couldn't do it which is short-term bullish. We are watching the IWM carefully to see if the 3-wave bounce from 10/27 turns bullishly impulsive or just remains a Wave 2 bounce after 5-waves down from July on the daily chart - the later count is our short-term bearish bias. The 10-yr US rate broke to highs for the week at 4.492% - rates reversing higher is key to the bearish case in the short term. The bulls have ignored bad news so far in this blow off rally, but the poor 10-yr and 30-yr US bond auctions last week highlight the fact that rising rates is the biggest threat to stocks in the short term and is a bearish fundamental. From an astro-finance perspective, this week into 11/21 is a Turning Point Week and we could be finishing a Wave 2 correction higher after 5-waves down on the SPX daily. We believe that the bond market technicals are more important than the stock market technicals at this point. The bad 10-yr US bond auction and the bad 30-yr US bond auction last week argue for higher 10-yr US rates in the short term. The market bulls believe that a year-end stock market rally has already begun, however, we believe that the rally is corrective and we will see lower SPX lows by late November/early December as the US economy continues to weaken. We've tried to keep a high percentage of cash in our portfolio this year and have just taken on short-term trades with our cash position. We've added shares of SPXS, SQQQ and TZA on rallies - we're hanging on to these short shares for more selling in late November/early December. If we get a retest of the 10/27 low at SPX 4103 by early December, selling these shares would be optimal. 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), 75% cash and 20% physical gold, silver and platinum.
11/24/23 (Commentary for Friday) The SPX rallied to 4560 on Friday which tested our 4563 target and then continued to trace out what appears to be a 4th wave correction into the close. The SPX needs a rally higher than SPX 4568 to finish a Wave 2 upside correction. The bullish case has the SPX working on finishing a 5-wave impulsive advance from 10/27 on Friday and the bearish case has the SPX finishing a Wave 5 of C of 2 correction on Friday after an EW 5-waves down from the July high on the daily chart. The SPX ended a 4th wave of C correction early 11/16 and started a 5th wave of C that needs a spike above 4568 on Monday to finish the pattern. We're taking the market one day at a time here and weighing the bullish and bearish technicals carefully. We're looking to sell our SPXS, SQQQ, and TZA shares on a retest of SPX 4260 if they are in profit territory or on a retest of SPX 4103 in late November/early December. It will take an impulsive leg down below SPX 4100 to get us really short-term bearish into late November. The IWM may have already finished its Wave 2 correction higher on 11/15 and may have already started its pullback - this needs to be watched carefully by traders. Crude oil bottomed at $72.37 on Thursday and has rallied in a bullish 5-waves.
Big Picture on Stocks (UPDATED) The US debt downgrade by Moody after the close on 11/10 and the global rise in long rates should reverse the SPX trend down in late November/early December despite the recent rally in the bonds.
Big Picture on PMs (UPDATED) Gold tested $1937 on 11/10 and rallied to $2003 on Friday, 11/14. Gold may have made a short-term high on Tuesday, 11/21 at $2007.
Stocks – The SPX continued its sideways action into Friday and the bears failed to break it down. We need a rally above 4568 early Monday to finish the rally from 10/27.
Gold – Gold tagged $2012 on Tuesday but only declined in a 3-wave correction to $1987 which is bullish.
Silver – Silver made highs for the week at $24.395 on the close of Friday.
Bonds – Bonds fell to 115'00 on Friday as the 10-yr US spiked to highs of the week.
Crude Oil - Crude oil corrected back to $75.18 on Friday.
Dollar Index – The USD bounce looked corrective and a move below 103.17 looks likely by Monday.
TURNING POINT DAY
The turn window for this week is 11/27.