Market Observations for the Week: Warning! Instead of roaring into the 7/31 New Moon/Fed rate cut day, the SPX has declined – still, one more leg up into the FOMC minutes is possible and could mark an important high. Crude oil is giving us a corrective bounce to test $58.50 into the New Moon. Gold is getting a B-Wave test of the $1454 7/19 high going into 7/31. We believe that GLD and GDX calls should be sold before the FOMC rate cut decision.
7/30/19 (Commentary for Tuesday) Our idea of a big SPX move into the 7/31 New Moon/Fed rate cut day hasn’t panned out. Instead, we have seen a market decline into the New Moon Timing Window. Our bias is for one more rally attempt into the FOMC rate cut decision tomorrow at 2:00 PM EDT. The market indices are advancing despite weak breadth numbers which confirms our bias for new highs above SPX 3028 this week. After a possible early August 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 is rallying into the 7/31 New Moon – we are seeing prices top $58.5 early Wednesday. Gold spiked to $1440 Monday evening – a close above $1431 was a buy signal in our work – our bias is for a B-Wave test of $1455 by the 7/31 New Moon and then a C-Wave pullback into Friday’s NFP jobs report. The USD reached 98.20 early Tuesday and started a correction that is trending into 7/31.
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Big Picture on Stocks (UPDATED) – We are getting close to an important summer high by the 7/31 New Moon and Fed rate-cut day. Our target of SPX 3100 may not be in play until late August.
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Big Picture on PMs (UPDATED) – Gold may be giving us a B-Wave test of the 7/19 high at $1455 going into the 7/31 New Moon – we could then see a C-Wave pullback into Friday’s NFP jobs report.
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Stocks – Our bias is for one more rally above SPX 3028 going into the 7/31 New Moon/Fed rate cut day.
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Gold – Gold spiked above $1437 late Sunday – then we closed Monday above $1431 which is a buy signal – our bias is for a B-Wave test of $1455 before the FOMC rate cut decision. The whisper number confidence report has GLD at 52-wk highs in bullish sentiment – this argues for more consolidation in gold after the 7/31 New Moon.
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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. A back test to $16.20 is underway. We favor the silver catch up trade over gold here.
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Bonds – Bonds tested 155’10 and may have ended an EW a-b-c upside correction – we got to 155’08 7/25 before reversing down hard.
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Dollar Index – The USD broke above 98.20 on Monday and started a consolidation into the 7/31 rate cut decision.
TURNING POINT DAY
The turn windows for this week are 7/31-8/01 – the New Moon/Fed rate cut day and 8/2, the NFP jobs report.
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