Folks,
Market Observations for the Week: The SPX continued its decline on Wednesday and the option trading is showing a one-sided bias for calls which is bearish. Last week, we saw $TRIN spikes to 2 or 3 on the market opens which denoted bears selling the opening SPX highs which was "contrary bullish". This week, we are seeing $TRIN values of 0.5-0.6 on the market opens which denotes the bulls buying the opening SPX lows – this is "contrary bearish". Today we saw the option trading giving us "euphoric call buying" as the SPX subdivided down – this is "contrary bearish". The NDX made a new ATH in December, but the SPX has not made an ATH so far for a case of possible "bearish divergence". The SPX needs to make a new ATH soon(SPX > 4818) to remove this "bearish divergence". The SPX made a rally high in the 12/26-12/27 Full Moon Timing Window and that statistically implies a higher high by the 1/11/24 New Moon – however, the SPX must start rallying impulsively to get there. The year 2024 is the fourth year of the Presidential Cycle and is statistically very bullish, however, the start of of a Presidential election year often starts with weakness in January. The NYSE composite has a two-year cycle that is due by mid-January before a steep correction into Marcb and this cycle may be coming in early. The 10-yr US rate may be giving us a "Running B-Wave" correction which argues for higher highs. The VIX may be coiling for a spike above 15. We still have shares of SPXS, SQQQ and TZA – we're hanging on to these short shares for potential hard selling into mid-January. We prefer to remain 75% in cash that is paying us a risk-free 5% while using small amounts of funds to trade good setups. Our current positions are 5% natural gas (UNG), 75% cash and 20% physical gold, silver and platinum.
1/03/24 (Commentary for Wednesday) The SPX made a high in the 12/26-12/28 Full Moon Timing Window and then gave us a possible EW a-b-c correction into Wednesday afternoon. How we trade on Thursday will determine the short-term trend of the market. The SPX and gold have a monthly tendency to trade down into Friday's NFP jobs report. The US 10-yr rate traced out 5-waves up on the hourly chart and then a "Running B-Wave" correction today which argues for higher US rates early Thursday. We're looking to sell our SPXS, SQQQ, and TZA bearish shares on a possible correction in the second half of January. Crude oil rallied to test $74 Wednesday evening.
Stocks (UPDATED) The trend of the 10-yr US rate may be reversing up – the TNX gave us 5-waves up and then a "Running B-Wave correction" which implies higher rates for early Thursday.
Big Picture on PMs (UPDATED) Gold tested $2099 Wednesday evening and continued its C-wave down of an EW a-b-c correction into late Wednesday – a strengthening USD and rising rates could continue the pressure down on gold into Friday's NFP jobs report.
Stocks – The SPX continued to sub-divide down into Wednesday's close and closing below SPX 4720 implies the likelihood of trading below 4700 early Thursday. One-sided call buying is contrary bearish here.
Gold – Gold tested $2099 Wednesday evening and is now pulling back in a C-Wave that could last until Friday's NFP jobs report.
Silver – We expect silver to continue its correction into Friday's NFP report.
Bonds – The 10-yr rate gave us an EW 5-waves up on the hourly chart and then a "Running B-Wave Correction" – we are looking for higher rates early Thursday.
Crude Oil - Crude oil tested $74 Wednesday evening but still looks bearish to us.
Dollar Index – The USD gave us a strong reversal up to 102.74 on Wednesday and pressured the PM sector down.
TURNING POINT DAY
The turn window for this week is 1/2.
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