donderdag 18 mei 2017

Thursday Market Observations

# The SPX may have started the expected May-June correction early Tuesday. The ES easily took out 2379 early Wednesday giving us an EW 5-waves down on the hourly chart. Just a corrective bounce into the 5/19-5/23 turn window could be shorted. We've been anticipating a May-June correction in the SPX before a summer rally and the 5/19-5/23 turn window is key.
# Increasing political woes for Trump weighed heavily on the market Wednesday. A sell signal on the 5-day MA of the CBOE equity put/call ratio (lower then .60) on Tuesday preceded the selloff. The muted response to the $TRIN and Option Premium Ratio showed a lot of "call buying" on yesterday's decline and this argues for another leg down after a short-term bounce.
# 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. The weak USD has also given gold a boost. Gold's test of $1300 on 4/22 put in a weekly high. Gold may have seen a major low on 5/4, but a retest is likely going into June.
# Silver stocks appeared to roll over Wednesday and that predicts weakness in the GDX on Thursday.
# Crude oil rallied yesterday as the XLE sold off. We're cautious for Thursday.
# Bonds held up well in the face of the SPX rally into Tuesday. This predicted the SPX decline on Wednesday.
# The Dollar Index is declining impulsively on Trump political woes and the Euro took out last week's high....