maandag 15 mei 2017

Monday Market Observations

*) No clear direction this coming week as 2 shorter cycles down and bottom during the week. Offsetting any downside is 2 longer cycles up. I suspect the down cycles win and the week ends up in the red. Appears though any movement up or down will be muted...

# The DJIA finished an EW a-b-c correction from 3/1 on 4/19 and turned up impulsively, but we may be close to a correction. An EW 5-waves down on the daily $VIX and hourly VIX charts argues for a SPX pullback soon. However, a close above SPX 2400 will be bullish.
# The NDX started a small correction in Tuesday's Full Moon Timing Window and Thursday's QQQ rally may have been a B-Wave test of the highs. We're still looking for new highs into May expiration.
# The $VIX gave us an EW 5-wave down on the hourly chart into early Tuesday. We're expecting a mean-reversion rally soon so this might be a dangerous time to chase the market winners. We're anticipating a May to June correction in the SPX before a summer rally, but the QQQ could still power to higher highs this week into May option expiration.
# The relative strength of the GDX/GLD ratio argued for the bounce we are seeing in the mining stocks, which is dragging gold and silver higher. But a retest of recent lows in the PM sector is likely going into June. Gold's test of $1300 on 4/22 put in a weekly high. Gold may retest the 5/4 lows near $1200 going into June, but a major low may have been seen on 5/4. Many gold analysts are calling this a "dead cat bounce", which makes us suspicious that the 5/4 low may have been a major turn.
# Silver stocks continue to look strong and are pulling silver higher.
# Bonds may have finished an EW a-b-c correction on the daily chart into Wednesday's Full Moon.
# The Dollar Index is rallying impulsively after the French elections and this continues to pressure the PM sector....