Folks,
Market Observations for the Week: After the mini-crash on Friday, more calming words from Trump on Chinese tariffs launched the ES and NQ futures higher overnight Sunday and gave us close to a 0.618 retracement of the Thursday/Friday decline. We had predicted extreme volatility in the 10/10-10/14 3-star critical reversal time window, and we are getting that. Some serious lunar spiral calendar cycles came into play on 10/10 and continue into early this week. As we have harped on repeatedly, when the SPX fails to give us a decent pullback in September, we are wary of the following October – especially the second half. We ARE IN OCTOBER now and continue to raise our stops and cash levels for a potential 10% correction later in the month. We are looking for a potential turn window on Tuesday and just a corrective pullback from Monday’s high in the SPX and NDX could get us long some favored sectors. Gold continues to rally to a new ATH at $4182.4 Monday evening as silver rallies to a new ATH at $52.4 after making a daily close above $50. The market is extremely sensitive to the news flow from the White House and China on the trade standoff. We could see a “dead cat bounce” in the SPX and NDX play out into Tuesday before a retest of the 10/13 lows. We watched the SPX and NDX trade on Monday as both indexes traced out an “inside day” – the SPX tested its 20-dma but closed below it. A close below the 50-dma would argue that an important top is in for the SPX. In the longer term, the GDX could test $90 by December, and silver stocks could continue to work higher after silver’s new ATH. Our current investment positions are: 25% cash, 5% QQQ, 25% GDXJ/SILJ/REMX and 20% physical gold/silver/platinum. We have a 25% overall allocation to our short-term trading account which was last updated on Monday to include: 50% cash, 0% SLV, 0% GLD, 25% SILJ, and 25% ETHA.
TURNING POINT DAY
We have a window for this week on 10/14.
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