All Star Market Timing

Folks,

Market Observations for the Week: Fears of a COVID-19 break out in the south helped to accelerate the SPX correction today and we got 5-waves down on the SPX. We filled our gap target at 3113 and the C-Wave kept sub-dividing down. We are getting a 4^th wave bounce overnight in the E-mini and the SPX could give us a gap-up open that could be faded for one more undercut low – the closing NYSE TRIN hit 2.5 which is a buy signal for Friday. Overall, the SPX could complete the 5-waves down of the C-Wave and could test the 38% retracement at 2938 on Friday. Gold stocks reversed down early and gold followed – we have a S1 pivot target Friday at $1722.

6/11/20 (Commentary for Thursday)
The SPX continued its flush from the post-Fed action on Wednesday and quickly washed away a lot of the froth that we’ve seen in recent weeks. The SPX filled out gap fill target at 3113 and kept on sub-dividing down. The blame for today’s selloff fell on the increase in COVID-19 cases in Texas and Arizona, but this market was ripe for a fall on its own weight. Back-to- back days with the TRIN-5<4 and historically low put/call ratios set the market up for a fall. We still believe that new all-time highs above SPX 3400 could be seen later this year, but in the short-term, we are getting an EW a-b-c correction on the hourly chart that should continue to sub-divide down into Friday before a low. 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 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 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. The financial sector may have seen an important high, however, as the Fed’s “zero-rate” outlook and rising sub-prime loan defaults could be a headwind. Crude oil is undercutting our target of $36 overnight and could test $34 on Friday. Gold and silver got an early boost from the hot, year-over-year increase of 0.4% in the PPI but declining gold stocks helped pull the metals down. The USD is bouncing back hard to test 97 overnight.

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 late summer. Today’s mini-crash is flushing out the froth and irrational exuberance that has built up in recent weeks, but we are looking for higher levels in the SPX later this summer.

Big Picture on PMs (UPDATED) – Silver and gold may need to complete one more leg down from their 6/1 highs to complete important seasonal lows before a big summer rally.

• Stocks – The SPX correction accelerated down as fears of a COVID-19 second wave hit the markets and quickly unwound weeks of FOMO and irrationally exuberant trading. The SPX could bounce early Friday before making an undercut low that could hold.
  
• Gold – The PPI number came in with a year-over-year increase of +0.4% and that bolstered gold and silver early in the session until the gold stocks led gold down – we could see a leg down under $1671 on Friday/Monday.
  
• Silver – Silver may have finished an EW a-b-c bounce from Friday’s Full Moon and we could be heading down for an undercut low.
  
• Bonds – Bonds continued to sub-divide higher in a bigger-looking rally pattern.
  
• Crude Oil –
  Crude oil broke below our $36 target over night and could test $34 Friday.
  
• Dollar Index – The USD bounced back to test 97 as a global flight-to-quality could be developing.
  

   

TURNING POINT DAY

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