Market Observations for the Week: We are turning very defensive on the SPX and NDX. Our Option Premium Ratio gave us s Major Sell Signal on Wednesday’s close before NVDA earnings and that reversed the market down early Thursday before a bounce on Friday. Also, The Option Premium Ratio broke higher to 0.93, a 5-month high, on Friday’s close and that is a “bearish continuation” signal for the stock market. We are monitoring a potential mini-crash pattern going into December. The 34-day SPX Fibonacci step out on both the daily and weekly charts lands on 12/2 and that could be an important low after the 21-day SPX Fibonacci step out came in as a high on Wednesday’s close. We still view this stock market as in a bull market correction which could undercut 6500 by the first week of December. We are expecting a market turn by 11/25-11/26, the Tuesday after a monthly option expiration. Investors and traders should add to exposure in the energy sector for the next rally phase in our opinion (XOM/CVX/XLE) but be mindful of short-term volatility from crude oil reacting to the US peace initiative in Ukraine. Our fractal models and cycle analysis pointed to a chance of severe volatility going into the last week of November and we are riding through it. Gold and silver have the potential for more pullback into 11/25-11/26 (the Moon ingress into Aquarius) and also the Comex option expiration. Our current investment positions were updated on Friday’s close: 25% cash, 0% QQQ, 20% GDXJ/SILJ/XLE, 10% 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 Friday to include: 75% cash, 0% SLV, 0% GLD, and 25% Barrick.
TURNING POINT DAY
Our turn window for this week is 11/25-11/26.
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