Folks,
Market Observations for the Week: Friday’s surprisingly positive NFP jobs report gave us a stock market blow off into the afternoon Full Moon/lunar eclipse but at the cost of extremely over-extended technical indicators. In addition to very overbought put/call ratios, our TRIN-5 gave us one of the most overbought readings (3.32) that we have ever seen. We are looking for a short-term SPX high by early Monday before an EW a-b-c correction into Friday. Big moves in the financials and energy stocks helped led the way higher on Friday. Crude oil ran higher into Friday’s Full Moon/lunar eclipse and could still target a gap-fill at $41 early Monday. The Fed wants to see the SPX back at the February highs and it can do it with its liquidity bazooka – DO NOT FIGHT THE FED. Gold is bouncing Sunday evening but another undercut low to $1650 is possible on Monday which is the 55-day Fibonacci step out from the 4/14 high.
6/07/20 (Commentary for Sunday) The big positive surprise in the NFP jobs report gave us a blow off into the weekend, but stretched technical indicators argue for a correction to start early Monday. We believe that new all-time highs above SPX 3400 will be seen later this month, but in the short-term, we are looking for an EW a-b-c correction on the 5-min chart. Our preferred EW count is that the 3/23 low was the end of a large Running B-Wave correction that should lead to new all-time highs by summer and we have seen that already in the NDX. The entire SPX price action from the 3/23 low can be viewed as an impulse wave that continues to sub-divide higher in a 5th wave of a bull market phase that started on the March lows. Our bias has been NOT to fight the Fed Bazooka here but to participate in the rally by buying bank stocks on dips, and we got another entry point to buy BAC and WFC early Thursday that worked well into Friday’s early strength. The Fed's determination to reflate the stock market trumped the May seasonal weakness in the Presidential cycle here and that has impressed us. Crude oil continues its blow off and could reach our gap-fill target of $41 by late Sunday/early Monday. Gold blasted down to $1671 on Friday and is bouncing into early Monday – there is still a chance of testing $1650 on Monday’s 55-day Fibonacci step out but a low may be close at hand. The USD is bouncing to test 97 Sunday night, but the trend still looks down.
- Big Picture on Stocks (UPDATED) – The SPX price action from the high of January 2018 to the low of March 2020 may have been a large Running B-Wave correction in Elliott Wave parlance. The rally off the 3/23 low looks like an impulse leg higher in a bull market that could make new highs above 3400. We may have started a liquidity-driven blow off in the SPX. Do not fight the Fed's Bazooka here and our bias is to buy BAC and WFC here on dips until the SPX gives us a 5-wave down on the hourly chart reversal signal.
- Big Picture on PMs (UPDATED) – Silver gave us 5-waves up on the daily chart and started a correction 6/1. Gold and silver pulled back into the Full Moon/lunar eclipse on Friday and started a bounce into the weekend. We could see another lower low to $1650 before the start of a big rally.
- Stocks – The SPX blew off big on Friday after the positive surprise on the NFP jobs report – we are looking for a correction to start early Monday.
- Gold – Gold is close to a low – Monday’s 55-day Fibonacci step out from the 4/14 high could see an important reversal higher.
- Silver – Silver got hit hard early Friday on the positive NFP report and we cashed in our SLV puts early – how we trade on Monday will be key.
- Bonds – Bonds tested 171 early Friday and bounced into Sunday night. The trend remains down.
- Crude Oil – Crude oil continues its blow off into Sunday night – we could see a gap-fill target of $41 early Monday.
- Dollar Index – The USD continues to sub-divide down impulsively, but we are getting a bounce to 97 Sunday night.
TURNING POINT DAY
The turn windows for this week is 6/8 and 6/12.
Leave a Reply