Market Observations for the Week: The SPX continued its rally into Friday’s monthly expiration and New Moon. We continue to look for a rally into Monday and then Tuesday should give us a pivot day for the SPX – the Tuesday after a monthly option expiration is a turn window for the SPX. We have yet to make a new ATH above SPX 6920 which is a little concerning to us and opens the market to a selloff into the New Year. The CPI inflation report early Thursday was market friendly (though controversial based on its data-deprivation from the government shutdown). The Fed announcement of both a $40B/month QE to dampen volatility in the repo market as well as a 25-bps rate cut in the Fed rate is “bullish juice” for the SPX going into 2026. However, stock selection will be key going into 2026, and we will continue to favor commodity stocks and DJIA stocks and look for money flow from the MAG-7 into Russell 2000 stocks. The Option Premium Ratio fell to 0.71 on Thursday’s close and this looks like the setup for another bullish “island reversal” pattern, which is short-term bullish for the SPX. Silver corrected into Thursday before breaking to a new ATH at $68.5 on Friday’s New Moon. Silver and gold look higher into Sunday night and the Sun ingress into Capricorn on Sunday is bullish for 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 12/15 to include: 25% cash, 25% SLV, 25% SILJ, and 25% Barrick.
TURNING POINT DAY
Our turn window for this week is 12/21-12/22.
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