Market Observations for the Week: The SPX gave us 5-waves up on the hourly chart from the 11/20 low on Friday and started a correction that could last to Fed Wednesday this week. Our Option Premium Ratio has given us a series of bullish “island reversal’ patterns that argues for a new ATH in December but “bullish divergence” on the VIX is keeping us cautious for now. Just a 3-wave SPX pullback into Fed Wednesday may give us a bullish setup for the stock market. Stan Harley’s superb cycle work for the SPX argued for a correction low on the last week in November, but it appears to have come in early on 11/20 at the NYSE market breadth low. Silver gave us an ATH at $59.9 on Friday and gold made a B-Wave top at $4192 before correcting into Sunday night. Just a 3-wave pullback into Fed Wednesday would be bullish for gold and silver. Our current investment positions were last updated on the 11/28 close: 20% cash, 5% 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, 25% SLV, 0% SILJ, and 0% Barrick.
TURNING POINT DAY
Our turn window for this week is 12/10 – Fed Wednesday.
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