All Star Market Timing

Folks,

Market Observations for the Week: Our technical indicators got extremely stretched last week in the Full Moon Timing Window. More telling, is that in the week of the February all-time high in the SPX, small traders opened 1.5 M call option contracts and this past week, the small traders opened 12.1 M call contracts – this is a SHOCKING SPECULATIVE BLOW OFF by the small traders group that traditionally has a poor track at market extremes. We were also shocked by the number of traders buying call option contracts on Thursday’s historic down day. ALL TRADERS SHOULD GET DEFENSIVE – raise cash where possible. After Thursday’s huge downside action, SPX gave us a positive tape on Friday, but the price action was ragged and corrective and we are looking for more down early Monday. The E-mini is down big overnight and we could see a gap-down open in the SPX. Gold is also declining overnight, and we could test $1710 sometime Monday.

6/14/20 (Commentary for Sunday)
Chairman Powell’s dour, but realistic, economic outlook for the rest of 2020 and the rise of COVID-19 cases in several states contributed to the big market fall on Thursday. Friday’s ragged rebound in the SPX looks vulnerable and the stock futures are pointing hard down into early Monday. The speculative excesses last week in put/call action and other technical measures painted the stock market as “ripe for a fall”. Back-to- back days with the TRIN-5<4 and historically low put/call ratios showed a fervent bullishness for stocks greater than what was seen at the February peak in the SPX. The financial sector may have seen an important high as the Fed’s “zero-rate” outlook and rising sub-prime loan defaults could be a headwind for bank earnings going forward. Crude oil is coming down to test $34.50 overnight and could target the S1 pivot at $33.50 on Monday. Gold and silver are selling off overnight and gold could test $1710 on Monday. The USD is bouncing and could test 97.5 overnight, but the USD appears on track to weaken substantially against the Yen.

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 NDX made a new all-time high last week and the SPX still could by late summer. Thursday’s mini-crash flushed out some of the froth and irrational exuberance that has built up in recent weeks, but there may be more to come early Monday.

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 E-mini is falling hard overnight and the SPX looks to have a gap-down open. We added a few VXX calls before Friday’s close.
  
• Gold – Gold is falling overnight and could test $1710 but we are expecting an important low early in the week.
  
• Silver – Silver is undercutting the Full Moon low on 6/5 but gold is holding far above its low for a possible case of bullish divergence.
  
• Bonds – Bonds continued to sub-divide higher in a bigger-looking rally pattern and are targeting the R1 pivot at 178’29.
  
• Crude Oil –
  Crude oil broke below our Person’s Pivot at 35.85 overnight and could test $33.5 Monday.
  
• Dollar Index – The USD could bounce to 98 on Monday in a corrective bounce.
  

   

TURNING POINT DAY

The turn windows for this week are 6/15 and 6/19.