All Star Market Timing

Folks,

Market Observations for the Week: Led by the bank stocks, the SPX gave us a rally day Thursday, but the outcome of the Fed’s stress test released post-market may inhibit the banks from returning capital to shareholders in the form of dividends or stock buybacks. Thursday looked like a corrective bounce for the SPX after Wednesday’s strong decline. Crude oil also bounced correctively on Thursday and we are looking for a test of $37 on Friday. Gold made a lower low for the pullback and touched $1765 before moving sideways into the evening. The USD continues to hold up around 97.5 Thursday evening.

6/25/20 (Commentary for Thursday)
Hopes of a positive “stress test” got the banks rallying early and it accelerated into the close. The bank stocks carried the SPX to a positive day with the NYSE breadth making highs for the day just before the close. However, the Fed announcement after the stress test post market cast doubt about the bank stocks ability to return capital to shareholders for the balance of 2020 and this could pressure the market down early Friday. Today’s corrective bounce on the SPX argues for lower lows early Friday. Crude oil also bounced today, but it looked corrective, and we could see a test of $37 on Friday. Gold continued its pullback and tested $1765 early before tracking sideways into the evening. The USD continued to hold up around 97.5 into the evening and may be basing for another leg higher. Strong, impulsive action here in the USD would argue for a short-term high in gold.

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 on 6/10 and has traced out a bullish “cup and handle” into the New Moon/solar eclipse – this is bullish. June 15 was the end of Wave A down of an EW a-b-c correction in the NDX– we may have seen a B-Wave top on Tuesday and a C-Wave down start on Wednesday.

Big Picture on PMs (UPDATED) – Gold and silver gave us important lows on 6/18 and gold bounced to a 8-year high at $1796 early Wednesday while the GDX/GLD ratio continues to move higher – this is bullish action. Silver is outperforming gold Thursday night.

• Stocks – The bank stocks led the SPX higher today, but the move looked corrective, and we could see another test of SPX 3000 on Friday.
  
• Gold – Gold pulled back to $1765 early Thursday and we treaded sideways into the evening. The break higher in the GDX/GLD ratio is bullish for the PM sector.
  
• Silver – Silver is outperforming gold here and the silver stocks are leading – we added CDE today.
  
• Bonds – Bonds are breaking out of a wedge pattern on the hourly chart – TLT may be the play.
  
• Crude Oil –
  Crude oil filled the March gap at $41.63 on Tuesday and declined into early Thursday before bouncing.
  
• Dollar Index – The USD continues to hold up around 97.5 Thursday evening and we could see another leg higher early Friday.
  

   

TURNING POINT DAY

The turn windows for this week are 6/22 and 6/24.