vrijdag 19 mei 2017

Friday Market Observations

*) The SPX may have started a May-June correction on 5/16 and just a corrective bounce into the 5/19-5/23 turn window could be shorted.
# The market bounced back after the announcement of a special counsel to investigate the Trump's campaign interaction with the Russians before the November election. But the bounce was not impressive. Moreover, the EW 5-wave decline in the hourly ES chart since early 5/16 argues for more correction soon. A sell signal on the 5-day MA of the CBOE equity put/call ratio (below .60) on today's decline and this Tuesday preceded the selloff. The muted rally in the $TRIN and Option Premium Ratio argues for another leg down after a short-term bounce. We've been anticipating a May-June correction in the SPX before a summer rally and the 5/19-5/23 turn window.
# The underperformance of the GDX/GLD ratio on Wednesday argued for today's pullback in gold and the GDX. Gold appears to need another leg down into 5/22. Gold's test of $1300 on 4/22 put in a weekly high. Gold may have seen a major low on 5/9 but a retest is likely going into June. Gold fell yesterday as the SPX bounced Thursday. Another leg down into Monday will set up a good buying opportunity.
# The silver stock weakness on Wednesday predicted the weakness in the PM sector yesterday. Another leg down for silver into Monday would set up a good buying opportunity.
# Crude oil bounced over $50 Thursday evening. Global demand is supporting this market.
# Bonds continue to hold up well.
# The Dollar Index is declining impulsively on Trump political woes and the Euro took out last week's high....