Folks,
Market Observations for the Week The SPX bottomed in our 1/20/22 turn window an4 gave us a 3-wave corrective rally into Wednesday which ended a 4th wave off the 12/13 high. Today, on an upward revision to GDP and a reduced jobless claims number, the SPX sold off to 3764 before rebounding into the close. The late bounce may have only been a small 4th wave bounce and we could see a test of Thursday's low early Friday near the exact New Moon. We still recommend 80% cash and 20% in physical gold/silver/platinum.
12/22/22 (Commentary for Thursday) The SPX gave us a 3-wave bounce off Tuesday's low that lasted into Wednesday(a 4th wave) and then reversed down Thursday in a 5th wave. We could see an undercut low early Friday near the exact New Moon and target 3750 before reversing. Notable hedge fund manager, David Tepper, chided traders for fighting the Fed's rate hike strategy and admitted to being short the stock market. It is also possible to see more SPX selling that could continue into the close with the "Jupiter square Uranus aspect" on 12/23 – we council caution here. We have not seen a SPX capitulation or a VIX blow off so far in 2022 but do believe that lower lows are due in Q1 2023 for the stock market. The USD continues to back test its downtrend line today after the spike up in the Yen Monday evening – how the USD trades on Friday will be very important.
Big Picture on Stocks (UPDATED) The SPX could still give us a 20%-50% correction by Q1 2023 – down to SPX 2400 – as the 20-yr stock cycle low bottoms and the US economy slows into a recession. The 13-month Fibonacci step out from the 1/4/22 SPX high and the 55-wk Fibonacci step out have us looking to February for an important low. We favor a high percentage of cash for capital preservation.
Big Picture on PMs (UPDATED) – We still expect gold stocks to test their COVID lows by Fed/March 2023 as the 8-yr gold cycle and the 20-yr stock market cycle converge on the downside. Central bankers are loading up on gold this year and global physical inventories continue to decline but higher nominal US rates could still pressure the PM sector down into Jan/Feb.
Stocks – Did the SPX finish 5-waves down at 3764 on Thursday. Our filtered "put/call" data argues that bearish intensity increased on Thursday and this could give us continued SPX selling into 12/26.
Gold – Gold pulled back in a potential C-Wave down.
Silver – Silver also is pulling back into Friday's New Moon.
Bonds – Bonds appear to be tracing out a "bear flag".
Crude Oil – Crude oil tested $80 early Thursday and could spike higher into the 12/23 New Moon.
Dollar Index – The USD continued to back test its downtrend line today – how we trade on Friday will be crucial for gold and the SPX.
TURNING POINT DAY
The turn windows for this week are 12/20 and 12/23, the New Moon.
Leave a Reply