Folks,
Market Observations for the Week: The NYSE gave us a 5-day TRIN of 3.99 which argues for more decline into the 9/11-9/13 turn window, but for the bigger picture we believe that we have a truce in the global trade war and the global currency devaluation until 10/1 when the Chinese Communists celebrate their 70th year of power – these two things were the DRIVING FORCE for the bull market in gold and silver. It makes sense that the SPX can hold up until 10/1 and that the PMs/bonds can correct until 10/1 but after that we expect the SPX to roll over and the rallies in the PMs/bonds to resume.
9/10/19 (Commentary for Tuesday) Today’s sell signal in our 5-day TRIN argues for more weakness into the 9/10-9/12 turn window and we could test SPX 2950. In the bigger picture though, we are looking for higher highs above SPX 3027 before 10/1. To us the market is setting up in similar fashion to the fall of 2018 and new highs are possible until October. “Out of favor” sectors like oil, materials and the banks are getting a bid here as we get some rotation out of the FANG stocks. Gold made new highs to $1566 in a “running B-Wave” corrective pattern, but then came down in a C-Wave that undercut $1500 late Tuesday – we should see a retracement bounce start early Wednesday. The USD is tracing out a sideways correction that could break higher.
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Big Picture on Stocks (UPDATED) – Chinese restraint on Hong Kong and playing nice on trade talks is allowing the SPX to rally into October. We could see a consolidation early this week into the 9/13-9/14 Full Moon Timing Window before a push to all-time highs above 3027 into the second half of September.
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Big Picture on PMs (UPDATED) – Gold undercut $1500 late Tuesday and may be ready to reverse up on Wednesday for a bounce into Friday’s Full Moon.
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Stocks – We expect the SPX to consolidate early this week to 2950 or so before rallying above 3027 by next week. With China playing nice on Hong Kong and US trade talks, the path of least resistance may take us to SPX 3100 by the end of September.
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Gold – Gold undercut $1500 again late Tuesday and may be reversing higher in a bounce into Friday’s Full Moon.
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Silver – Silver is reversing higher with gold Tuesday night and could test $18.60 by Friday.
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Bonds – Bond yields continue to rachet higher giving bank stocks a boost.
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Crude Oil – Crude oil tested $59 and is making multi-week highs – beaten down oil service stocks like SLB continue to rally hard.
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Dollar Index – The USD gave us a corrective bounce into 99.43 early Monday and started a sideways consolidation that could break higher.
TURNING POINT DAY
The turn window for this week is 9/13-9/14, the Full Moon Timing Window.
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