Folks,
Market Observations for the Week: The FOMC gave the market a 25 bp rate cut but Chairman Powell hedged on another cut in December, and the SPX sold off. It now appears that the E-mini has given us an EW 5-waves down on the hourly chart, and the SPX has started a correction. Disappointing earnings from META also helped drive the selloff in the SPX and NDX on Thursday. However, the SPX has roared over 200 pts since last week and the QQQ has given us 3 consecutive days above its daily Bollinger bands – which is rare and short-term dangerous, statistically. The SPX got a “sell the news” reaction on Fed Wednesday, and we could now see a quick correction back to SPX 6700 in the next week. In the event of more SPX correction, we are inclined to buy the dip in our favored energy stocks XOM/CVX/SLB which look poised for outperformance in early 2026. Still, the CPI inflation report on early 20/34 looked worrisome to us and we prefer the commodity stocks here as early 2026 could bring some strong inflationary pressures. Low grain and crude oil prices could be reversing higher now and that should put even more heat on the consumer in 2026. Gold and silver saw a short-term trading low on Tuesday when the Moon ingressed into Aquarius but only bounced in a corrective 3-waves into Thursday which looks bearish to us if the C-Wave doesn’t extend higher quickly into Friday. We believe that oil stocks (XOM, CVX) should be acquired here on dips and we need to be mindful of XOM and CVX earnings on Friday. Crude oil and the XLE look very undervalued compared to the PM sector. Our current investment positions have been updated: 15% cash, 5% QQQ, 20% GDXJ/SILJ/XLE, 15% XOM/CVX/SLB and 20% physical gold/silver/platinum. We have a 25% overall allocation to our short-term trading account which was last updated on Thursday to include: 75% cash, 0% SLV, 0% GLD, 0% IWM, 0% ETHA and 25% XOM/CVX/SLB.
TURNING POINT DAY
Our next turn window is 10/28-10/29, which is Fed Wednesday.
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