woensdag 28 juni 2017

Wednesday Market Observations

# The SPX opened lower Tuesday, bounced into the positive early afternoon and then sold off hard into the close. The postponement of the vote on the Republican health bill in the Senate added to the selling at the close. The SPX broke down below last week's low at 2431 and put us in a "breakdown" mode. A quick 5 - 10% decline is possible; our target is around SPX 2300 by mid July. The FANG stocks led the market down here and may give us good buy-in points going into July. The market needs a good scare here to rebalance sentiment. The reversal of Monday's "gap-up opening" alerted us to today's breakdown. After the June-July correction (4th wave) runs its course, we're expecting a Rally (5th wave) with a high for the year around August 20 with a minimum target of SPX 2480.
# Gold declined in a 5th wave down to our symmetry target of $1236, finished an EW 5-wave down pattern on the hourly on Monday and then bounced into Tuesday as bullish sentiment for gold came in very low. The GDX has an important 55-day Fibonacci step out from the 5/4 low due Wednesday and we're expecting a big move. Our bias is for a reversal higher but it could go either way. The GDX finished a bullish EW a-b-c-d-e triangle on 6/21; this has turned us cautiously bullish.
# Silver outperformed gold handily yesterday and looks bullish to us.
# Crude oil rallied yesterday, but plunged after hours on API supply numbers, we're expecting a retest of $42.
# Bonds declined on Draghi's "end of deflation" comment.
# The USD fell hard again Tuesday on the spike in the Euro after Draghi's "deflation is over" comment. This is a bullish sign for gold and commodities.