All Star Market Timing

Folks,

Market Observations for the Week: The SPX went green after the Fed minutes but then sold off into the close. Powell assured the markets of “zero rates” for the indefinite future and this gave the USD a break below 96 into the close. Overall, the SPX should continue to consolidate into Thursday as the financials could continue to weaken on the “zero rates indefinitely” outlook. The FANG stocks took the NDX to an all-time high close above 10,000 while the IWM and SPX sold off. The grip of FOMO (fear of missing out) and irrational exuberance is still strong, however, and that is showing up in the overbought put/call ratios. The SPX still looks vulnerable here and could target a gap-fill at 3113. Gold and gold stocks gave us impressive rallies after the Fed minutes on the lure of easy money way into the future.

6/10/20 (Commentary for Wednesday)
The SPX continued its consolidation into the Fed minutes and after a failed rally declined into the close. The low put/call ratios argue that we may have more to go on the downside into Friday. We believe that new all-time highs above SPX 3400 will be seen later this month, but in the short-term, we are getting an EW a-b-c correction on the hourly chart that could continue to sub-divide down into Friday. 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 late June 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 is that this is the final blow off in the secular bull market that started in March 2009 and believe that even the fully re-opened US economy will start to fail by late summer. We do NOT believe in fighting the Fed Bazooka here, though, and plan to participate in the rally by buying dips in the energy sector and commodity sector stocks. The financial sector may have seen a high, however, as the Fed’s “zero-rate” outlook and rising sub-prime loan defaults could be a headwind. Crude oil tested $41 late Sunday and started an EW a-b-c correction that is testing $38 Wednesday night. Gold and silver both saw important lows on Friday’s Full Moon and we saw a reversal higher on Wednesday after a volatile morning session. The strength in gold stocks was very impressive late in the day. The USD may have started an important “bear phase” – a close under 96 could confirm this.

Big Picture on Stocks (UPDATED) – The SPX price action from the high of January 2018 to the low of March 2020 was 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 will make new highs above 3400 by early summer. We have started a liquidity-driven blow off in the SPX that is being fueled by FOMO and irrational exuberance. Do not fight the Fed’s Bazooka here and our bias is to buy commodity-sensitive stocks on dips until the SPX gives us an hourly chart reversal signal.

Big Picture on PMs (UPDATED) – Silver gave us 5-waves up on the daily chart and gave us a correction into the 6/5 Full Moon before reversing higher this week. Gold stocks outperformed gold today – this is bullish for more rally in the PM sector.

• Stocks – The SPX continued its correction into Wednesday but caught a bounce after the Fed minutes that faded into the close. Low put/call ratios argue for more downside into Friday with a potential target at SPX 3113.
  
• Gold – The CPI number came in as expected but gold had a volatile session with an up-down-up session that finished strong with gold stocks leading the way after the Fed statement.
  
• Silver – Silver finished a 4^th wave correction on Friday’s Full Moon – the silver stocks(SIL) are leading the metal higher which is bullish.
  
• Bonds – Bonds rallied in 5-waves on the hourly chart and that argues for higher prices in the short term.
  
• Crude Oil –
  Crude oil tested $41 Sunday night and started a correction that could test $36 by Friday.
  
• Dollar Index – The USD continues to sub-divide down impulsively – we may have started an intermediate move down that could benefit the PM sector. A close below 96 would confirm the downtrend.
  

   

TURNING POINT DAY

The turn windows for this week is 6/8 and 6/12.