All Star Market Timing

Folks,

Market Observations for the Week: The new housing starts report came in weaker than expected and that got stocks off to weak open – economic weakness is showing up in the data as the Delta variant runs wild. Market weakness accelerated after the FOMC minutes – the majority of the Fed appears to be in favor of tapering MBS and Treasury securities. Our indicators predicted a short-term high in the 10/13-10/16 turn window and then a pullback into 8/19 when Uranus turns retrograde. We could see a powerful rebound rally take root tomorrow and run into the Full Moon/Jupiter conjunction over the weekend.  We kicked up our cash levels to 60% as we approach negative seasonality in September and the 34-yr Fibonacci step out from the great 1987 crash. Overall, we still view the US economic rebound as fragile here and vulnerable to more Delta-induced economic slowdowns. As economic readings come in weaker than expected year-over year inflations readings from the CPI and PPI are dwarfing wage gains and we feel that the Fed is delusional about “transitory inflation”. Despite all the bullishness in the crypto space, bitcoin continues to sub-divide down impulsively – we saw bitcoin as just finishing an EW a-b-c bounce up at 48,100 before it rolled over. Crude oil made a multi-week low to $63.9 – a run higher into the weekend’s Full Moon is still possible. Gold is trying to hold up after the Fed Day, but the GDX looks like it could give us an undercut low early Thursday. The USD blasted up to test its R2 pivot at 95.5 overnight Wednesday and this is pressuring the PM sector.

8/18/21 (Commentary for Wednesday) Our indicators argued for a short-term high in the SPX on Monday and a pullback into 8/19 before a rally into the weekend when Jupiter conjuncts the Full Moon – so far, this analysis appears to be on track and we our expecting a strong rebound rally on Thursday as Uranus goes retrograde. We raised our cash levels to 60% as US Excess Liquidity rolls over and that predicts a “compression” in the S&P 500 P/E ratio this fall. The recovery stocks got slammed again on a weaker than new home starts report. The US 10-yr rate got a bounce on FOMC day as the majority of the Fed appears to be in favor of tapering the purchase of MBS and Treasury bonds – rising long rates could still be the catalyst for the fall decline if the Fed’s “tapering plan” goes awry. Crude oil was pressured to test its S1 support pivot at $63.3 – a run higher into the weekend Full Moon is a possibility. Gold gave us a correction that came down to $1775 overnight – the test of the March double-bottom might have been just a “wave 2” correction – there is still a bullish case present despite all the gloom. The USD blasted higher to test 93.5, its R2 resistance pivot, and that is pressuring the PM sector.

Big Picture on Stocks (UPDATED) – The SPX made a new high in our 8/13-8/16 turn window before a correction into the 8/19 turn day. We raised our cash level to 60% as the US Excess Liquidity rolls over – the lofty S&P 500 P/E ratio could get “compressed” this fall.

Big Picture on PMs (UPDATED) – Gold tested $1800 before pulling back to $1775 after the FOMC minutes – the bullish case is that the test of the March lows was just a “wave 2” correction. However, weakness in the GDX today tempered bullish enthusiasm for the PM sector. We’ll see if an undercut low in the GDX early Thursday can give us an important low.

• Stocks – The SPX and DJIA gave us a weak open but we rallied up to the FOMC minutes before we saw the big selling. With the NYMO (NYSE McClellan Oscillator) closing below its lower Bollinger band today, we are expecting a rebound rally on Thursday.
• Gold – Gold tested $1800 and we held up after the FOMC minutes, but the GDX is threatening to give us an undercut low early Thursday.
• Silver – Silver is getting crushed by the rallying USD overnight Wednesday.
• Bonds – The US 10-yr bond rate gave us a correction into Wednesday – we held off on buying TNX so far.
• Crude Oil – Crude oil is testing its S2 support pivot at $63.3 – it could still make a run into the weekend Full Moon.
• Dollar Index – The USD blasted to 93.5 and is pressuring the PM sector Wednesday night.

TURNING POINT DAY

The turn windows for this week are 8/16 and 8/19.