Market Observations for the Week: The SPX has been in correction mode since 7/26 and rallies should be viewed with suspicion until we establish a solid low. The strong bounce this morning was plagued by very weak market breadth and it crumbled under Trump’s latest tariff tweet. Crude oil bounced into the New Moon before reversing down hard. Gold gave us a B-Wave test of the 7/19 high before reversing down in a C-Wave on the hourly chart into Thursday morning. Gold completed an EW a-b-c decline from the 7/19 high at $1455 down to $1412 and then exploded higher to new rally highs after Trump’s trade tweet.
8/01/19 (Commentary for Thursday) The SPX confirmed a downtrend from 7/26 and “weak market breadth” rallies should be viewed with suspicion. The SPX held up into the New Moon and then reversed sharply lower during Powell’s press conference – today’s early bounce was knocked down after Trump’s proposed imposition of a 10% tariff on Chinese goods on 9/1. 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 to $58.81 into the 7/31 New Moon before reversing down sharply. Gold spiked to $1447 Wednesday morning (a B-Wave test of $1455) before falling in 5-waves down to $1412 into Thursday morning (a completed C-wave down) – we saw a completed EW a-b-c correction from 7/19 into the 8/1 13-day Fibonacci step and then exploded higher after Trump’s tweet to $1461. The USD tested 99 Wednesday evening after Powell waffled on additional rate cuts in 2019 but Trump’s tweet crushed the greenback going into Thursday’s close.
-
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.
-
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.
-
Stocks – The SPX confirmed a downtrend from 7/26 and the price pattern argues for at least one more lower low (test of 2900?) before a bottom.
-
Gold – Gold finished an EW a-b-c correction from 7/19 to 8/1 at $1412 and then exploded to new rally highs at $1461 – we are looking to buy corrective dips after the NFP jobs report on Friday.
-
Silver – Silver held up into the New Moon and then gave us a plunge to $15.94 – this may have ended a correction.
-
Bonds – Bonds tested 158, highs for the year, after Trump’s trade tweet.
-
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.
Leave a Reply