Market Observations for the Week: The SPX held up into the FOMC rate cut statement and then fell hard during Powell’s press conference when he implied a “one and done rate cut” before he walked the statement back. Crude oil finished an EW a-b-c bounce to $58.81 in today’s New Moon before reversing down. Gold gave us a B-Wave test of the 7/19 high before reversing down in 5-waves on the hourly chart into Wednesday evening. Gold may have completed an EW a-b-c decline from the 7/19 high at $1455 down to $1416. How we trade into Friday will tell us.
7/31/19 (Commentary for Wednesday) The SPX held up until Powell’s press conference and then fell hard after Powell implied a “one and done rate cut”. The SPX held up into the New Moon and then reversed sharply lower in a deeper fall until Powell “walked back” his statement. After a possibly extended correction into August, 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 (we got a ¼ point rate cut on 7/31) – a crisis in the European banking system would evoke a quick easing or QE response from the US Fed. Crude oil rallied into the 7/31 New Moon – we got to $58.81 before reversing down sharply. Gold spiked to $1447 Wednesday morning (a B-Wave test of $1455) before falling in 5-waves down to $1416 into the evening (a completed C-wave down?) – we may have seen a completed EW a-b-c correction from 7/19 into the 8/1 13-day Fibonacci step. The USD spiked to 98.93 Wednesday evening after Powell waffled on additional rate cuts in 2019.
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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 – The SPX held up into the 7/31 New Moon and then reversed down impulsively – we could continue to correct into early August.
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Gold – Gold gave us an early spike to $1447 (a B-Wave test of the $1455 high) before rolling over in a sharp C-Wave down to $1416 – did we finish an EW a-b-c correction from 7/19? 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 – Silver held up into the New Moon and then gave us a plunge to $16.14 – this may have ended a correction.
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Bonds – Bonds took out 155’14 and turned the trend higher.
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Dollar Index – The USD tested 99 late Wednesday before a correction.
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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