Market Observations for the Week: It’s possible that the SPX 4th-wave correction ended late Friday and that we are now into a 5th-wave higher that could take us to new all-time into next week. Crude oil is giving us a retracement rally that could test $58. Gold pulled back in an EW a-b-c correction from $1455 on 7/18 to $1414.
7/23/19 (Commentary for Tuesday) A debt ceiling deal and progress on US-China trade talks gave the SPX a boost into Tuesday’s close. The SPX may have ended a wave 4 correction late Friday and started a wave 5 rally that could make new highs into next week. The market indices are holding up despite weak breadth numbers which confirms our bias for new highs above SPX 3017 into next week. After a mid-July correction, we still have our target of SPX 3100 by August/September – we DO expect the large sideways SPX consolidation pattern from January 2018 to be DECISIVELY taken out this summer before we roll over for a fall correction. Global markets are all about liquidity here and we have long predicted that the Fed will shift back to an easing stance(set to start on 7/31) – a crisis in the European banking system would evoke a quick easing or QE response from the US Fed. Crude oil got a bounce late Tuesday and could boost the energy sector into Wednesday. Gold undercut $1415 early Tuesday and bounced to $1431 before settling back below $1420. The USD grinded higher to test 97.75 – a move above 98 looks in the cards.
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Big Picture on Stocks (UPDATED) – The SPX may have ended a mild wave 4 on the daily chart late Friday. We are getting close to an important summer high by the 7/31 New Moon and Fed rate cut day.
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Big Picture on PMs (UPDATED) – Gold undercut $1415 and may have finished an EW a-b-c correction – a reversal higher above $1431 would confirm this.
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Stocks – The SPX may have ended its correction late Friday and is rallying to test highs above 3000 in a 5th wave into next week.
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Gold – The GDX/GLD ratio remains resilient – we are looking for a bounce higher in gold on Wednesday.
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Silver – We saw “big prints in SLV in the Dark Pool” last week – this means that silver is moving from “weak hands” to “strong hands” here and should accelerate its move up. We favor the silver catch up trade over gold here.
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Crude Oil – Crude oil rallied into Tuesday’s close and looks ready to test $58 on Wednesday.
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Bonds – Bonds finished the B-Wave of an EW a-b-c correction on the hourly chart at the open Monday and is reversing down in a C-Wave.
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Dollar Index – The USD looks poised to exceed 98 on Wednesday.
TURNING POINT DAY
The turn window for this week is 7/22-7/23
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