Folks,
Market Observations for the Week: The SPX made a new high today as the market continues to get bid up into the 9/3-9/6 3-star geo-cosmic time window which includes the 9/6 New Moon. Our bias is that we are marking a significant high here in early September and how the market reacts to the NFP jobs report early Friday is key. If the market gets a goldilocks number early tomorrow, the SPX could continue its blow off into the 9/6-9/7 new Moon Timing Window. The Labor Day New Moon on 9/6 is our first projected Major Top Timing Window for the fall and the 10/6 New Moon is the second projected Major top Timing Window. If the SPX doesn’t top in the 9/6-9/7 New Moon Timing Window, the odds favor more blow off into the 10/6 New Moon. The NYSE Advance/Decline line has been diverging from the steady advance of the SPX for weeks now. This divergence could “heal itself” in the next few weeks by a broad-based rally in the Russell 2000 into the 10/6 New Moon or it could manifest into the first significant market correction in about a year by topping out on 9/6-9/7 – we argue for the latter but are open to both scenarios. Carter Worth and others on CNBC have pointed out that August 2021 has seen more daily new highs in the SPX than seen in August 1987 or August 1929. Is this a relevant statistic to the state of our current financial markets? WE BELIEVE IT IS and the Fibonacci 34-year step out from the great crash of 1987 argues for a Major TOP this fall in our opinion and that is why we argue for a minimum 70%+ cash position at this time and the willingness to hold it into December. Giving up potential market gains into the weakest time of the market year is a good trade off considering the portfolio risk at hand. The US bond market is the key market to watch now – our bias is that a sudden 10-yr rate rise may strike after Labor Day – this may force the Fed to act before December.
9/02/21 (Commentary for Thursday) Our first fall target for a potential major top in stocks is the 9/6 Labor Day New Moon and this overlaps with the 3-star 9/3-9/6 geo-cosmic turn window. The SPX continues to grind upward and made a new high today, but how the market reacts to the NFP jobs report early Friday is key. If the market gets a goldilocks number, we could see a final blow off into a significant high in the 9/6-9/7 New Moon Timing Window. A weaker than expected NFP jobs number might be written off as a temporary Delta-variant issue. Many analysts are calling for further stock blow off as the noted Market Vane sentiment reading for stock bullishness hit multi-year highs at 72% last Friday. Entering this week, we thought that the SPX could give us a short-term high on Monday before a sideways consolidation into Thursday, but the price action has been more bullish than that. Our bias is for the SPX to make higher highs into the 9/6-9/7 Labor Day New Moon Timing Window with the recovery stocks leading in a potential final run higher. We raised our cash position to 70% after the Market Vane Bullish Percent went to 72% last Friday, the highest bullish sentiment in years. Since we expect long rates to start spiking in early September, we would take profits in tech stocks into late August and early September, especially in IRA accounts. In addition, the background monetary conditions are deteriorating – US liquidity conditions are tightening in advance of the Fed taper as US Excess Liquidity measures continue to roll over and that predicts a “compression” in the S&P 500 P/E ratio this fall and an end to the 12-yr bull market from 2009. Gold made a short-term high at $1826 Sunday night and started an EW a-b-c correction that could run into its next major turn window on 9/3-9/7 – gold has a monthly tendency to decline into Friday’s NFP jobs report and we could see an undercut low early tomorrow in gold. The USD is sub-dividing down impulsively and it made a lower low to 92.16 today – the trend has turned down and that should support the PM sector.
Big Picture on Stocks (UPDATED) – The SPX has continued to sub-divide higher into the 9/3-9/6 3-start geo-cosmic turn window and this could mark a significant top. At Jackson Hole last Friday, Chairman Powell gave a green light for more stock blow off into the 9/6 New Moon or into the 10/6 New Moon, our second fall time target. We raised our cash level to 70% when the Market Vane Bullish Percent hit 72% last Friday. The US Excess Liquidity measure is rolling over – the lofty S&P 500 P/E ratio could get “compressed” this fall.
Big Picture on PMs (UPDATED) – Gold rallied to $1826 Sunday night before starting an EW a-b-c correction that could extend into Friday’s NFP jobs report. It will take a move above $1837 to convince us that a substantial rally is underway. Gold stocks may need a macro catalyst like a 3-5% SPX correction before they get a bid.
- Stocks – The SPX continues to grind higher into the 9/3-9/6 turn window which includes the 9/6 New Moon. How the market reacts to the NFP jobs report early Friday is key – a goldilocks number will give us a spike into the 9/6-9/7 New Moon Timing Window and a potential significant top.
- Gold – Gold tested $1826 Sunday evening and is continuing its sideways consolidation into the 9/3 NFP jobs report. Gold could give us an undercut low early Friday before a reversal higher into the 9/6 New Moon.
- Silver – Silver needs an undercut low below $23.81 to make a pattern completion.
- Bonds – Bonds may be close to finishing a sideways correction here on the hourly chart which is bearish.
- Crude Oil – Crude oil gave us a sharp reversal higher and is holding above its Person’s pivot overnight which is bullish – money appears to be rotating into the energy stocks here.
- Dollar Index – The USD is sub-dividing down impulsively and we made a new low today at 92.16 – the USD may have made an important high at 93.73 on 8/20 – this should benefit the PM sector.
TURNING POINT DAY
The turn windows for this week are 8/30 and 9/2-9/3 which overlaps the NFP jobs report.
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