Financial Market Timing

The Daily JDV Market Timer - February 9, 2023


Market Observations for the Week: The SPX made a first hour high today and sold off into the close. More important, the AAII Sentiment Survey showed a huge shift in bull/bear sentiment. The AAII bullish sentiment came out the highest since December 2021 at 37.5% and the bearish sentiment came in the lowest in many weeks at 25.0%.Courtesy of the recent AI bubble, the excess bearish sentiment in early January has been reversed to the bullish side. Since 2/2, the US 10-yr govt rate has risen from 3.34% to 3.85% and today a bad 30-yr Treasury auction sent the 10-yr US rate back up to test the highs. The tech stocks have barely noticed so far. Our short-term bias is that the SPX can hold up into the CPI report on 2/14 but will get a negative surprise which will knock both the SPX and gold down hard. In our view the SPX has already priced in a "soft economic landing" and we continue to remain cautious and continue to raise our cash levels - there will be a much better opportunity to buy the SPX in May/June based on our cycle count.  Monthly and weekly Fibonacci step outs from the 1/4/22 SPX high point to the first half of February as a reversal time window and WE ARE THERE. However, the chart of the SPX still has the possibility of making a higher high into next week. Our intermediate-term bias is that the SPX rally from 10/13 is a Bear Market Rally and our Time Window target is now into the first half of February. One price target for this Bear Market rally was the 50% retracement area around 4150 (achieved 2/2) or the 61.8% retracement around 4300. The NDX has been leading the market higher and has outperformed both the SPX and DJIA - investors have moved from the industrial stocks back to chasing technology stocks again like the AI stocks.  Crude oil pulled back to its S1-pivot support at $76.51 before bouncing back to its Person's pivot at $77.72. The USD finished its EW a-b-c correction and spiked higher knocking gold down to $1865. 

2/09/23 (Commentary for Thursday) The SPX is in the Time Window - the first half of February - for a major turn and we have a SELL SIGNAL in our Option Premium Ratio and now after today, we have an important bull/bear sentiment inversion from the AAII sentiment survey. We have turned cautious and started raising more cash - our cycle work is calling the SPX much lower by May/June and we plan to take advantage then. The bearish market sentiment seen in early January has been converted to the bullish side and the AI-technology bubble has traders chasing tech stocks again despite their near-term challenges. The tech stocks have ignored the move up in the 10-yr US rate the past five trading days and is vulnerable to a hotter than expected CPI report next Tuesday that could slam down the SPX and gold.  We still contend that the market rally from October 13 is a Bear Market Rally that will make new lows in Q2 2023 - we are not in the "this is a new bull market camp". Our Bear Market Time Window target is the first half of February which included a Fed Day on 2/1, AAPL and AMZN earnings on 2/2, a NFP jobs report on 2/3 and a Full Moon on 2/5.  We did not see a SPX capitulation or a VIX blow off in 2022 but do believe that lower SPX lows are due in Q2 of 2023 for the stock market. The China reopening after its Covid lockdown should be bullish for crude oil at some point – we like buying pullbacks below $70 if seen. The USD made a low at 100.8 on 2/1 and then rallied in 5-waves to test 103.96 before correcting in an EW a-b-c correction that ended today with a spike higher. We currently hold 70% cash, 10% uranium stocks and 20% in physical gold/silver/platinum.

Big Picture on Stocks (UPDATED) The SPX rallied in an EW 5-wave pattern from 12/22 into 1/23 - the 3-wave pullback into 1/25 was bullish for a rally to 4195 during  Fed Week. However, the SPX could still give us a 20%-50% correction by Q2 2023 - down to SPX 2400 - as the 20-yr stock cycle low bottoms and the US economy slows into a recession. The 13-month Fibonacci step out from the 1/4/22 SPX high and the 55-wk Fibonacci step out have us looking to the first half of February for an important turn - this should be a trading high for the SPX. We favor a high percentage of cash for capital preservation.

Big Picture on PMs (UPDATED) We consider the rally from 10/13/22 as a bear market rally in gold, silver and the PM stocks that should peak in the first half of February. However, we still expect gold stocks to test their COVID lows sometime in Q2 of 2023 as the 8-yr gold cycle and the 20-yr stock market cycle converge on the downside. Central bankers loaded up on gold last year and global physical inventories continue to decline but higher nominal US rates could still pressure the PM sector down into Q2 2023.

Stocks – The SPX made a first hour high today before selling off into the close. Still, the SPX could still mount another rally attempt that could eclipse 4195.

GoldGold tested $1900 before dropping hard on a USD spike to $1864.

Silver – Silver is testing $21.85 Thursday evening.

Bonds - Bonds tested a lower low today at 127'25.

Crude Oil – Crude oil pulled back to test its S1-oivot at $76.51 before bouncing to test its Person's pivot.

Dollar Index – The USD finished its EW a-b-c correction early Thursday and spiked higher to derail the PM sector.


The turn window for this week is the 2/6-2/7 Full Moon Timing Window.


June 07, 2023

June 06, 2023

June 05, 2023

June 04, 2023

June 01, 2023

May 31, 2023

May 30, 2023

May 28, 2023

May 25, 2023

May 24, 2023