Folks,
Market Observations for the Week: The aggressive Trump rhetoric against Greenland rattled the market and gave us a stiff correction by the end of Tuesday. The close of our TRIN-5 indicator above 6.0 on Friday cautions us against getting too bearish here on the SPX. In fact, our Option Premium Ratio gave us another “Island Reversal” pattern (0.72, 0.87, 0.73) on Tuesday’s close which is SHORT-TERM BULLISH for the SPX. Our TRIN-5 indicator closed above 6.0 on Friday’s close was bullish and a RECONFIRMING Buy Signal for the stock indices, so the SPX will be making higher highs soon. Our plan here is to buy 3-wave corrections in the DIA on the hourly chart, so we will be looking to add to the DIA on Wednesday. Geo-political news from Iran and a big winter storm building in the US has us watching the oil sector for some long setups in our favored energy stocks: XOM/CVX/COP/SLB. Both the SPX and gold/silver gave us just 3-wave corrections on the 55-day Fibonacci step out on 1/14 and so, we are bullish for the SPX and the PM trade going into late January. Stock selection will be key going into 2026, and we do favor an important intermediate peak in the SPX by May 2026 – XOM/CVX/SLB is coming into a seasonally strong period. Our current investment positions were updated on the 1/9 close: 20% cash, 5% SLV, 15% DIA, 25% 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 1/13 to include: 20% cash, 10% SLV, 20% SILJ, 10% Barrick, 20% DIA, 20% XOM/SLB.
TURNING POINT DAY
Our turn window for this week is 1/20, the Tuesday after a monthly option expiration.
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