vrijdag 30 juni 2017

Friday Market Observations

*) We hit our SPX 2450 target on 6/19 and then started a consolidation that could yield a 5-10% decline into mid-July.
# Volatility has return to the stock market, which makes sense if the Fed embarks on "quantitative tightening" in the near term. There was intense rotation out of technology stocks yester,day and into the banks which makes sense as global 10-yr rates have backed up. Tuesday's low volume rally was suspect and yesterday's break of Monday's low by the NDX argues for more decline into next week. We are still vulnerable to a normal bull market correction of 5-10% going into mid-July. After the June-July correction (a 4th wave?) runs its course, we're expecting a high for the year around out Time-target August 20 (+/-3 trading days) with a minimum target of SPX 2480.
# Gold declined down to our symmetry target of $1236 and finished an EW 5-wave down pattern on the hourly on Monday and then rallied in 5-waves into Wednesday. Thursday we tested Monday's low and bounced, if we undercut Monday's low, we will expect a test of the $1214 level by next week. The GDX declined in 5-waves from Monday's high; we need to hold 21.75 to maintain our short-term bullish stance. We are looking for a move higher Friday.
# Silver remains stronger than gold which is bullish.
# We also think that crude oil made a major low at $42 horizontal support. We will look for a run up into our August 20 "high for the year" time target in the SPX.
# Bonds are close to finishing an EW a-b-c decline on the hourly chart. We should see a bounce on Friday. On the heels of Draghi's comments on Monday, "the end of deflation", German Bund rates have led global rates higher.
# The Dollar Index continues to fall against a surging Euro. This should be bullish for gold and commodities....