March 21 Weekend Report – Market Health
The past few weeks have been very choppy and I mentioned that the markets hate uncertainty. Over time, things would either begin to resolve and stabilize (WAR, INFLATION SCARES, etc) and we could move higher in the second daily cycle OR we would run out of time, and the threat to the downside would take over. I have recommended cash or keeping position size very small until we see what is going to happen. This week the markets chose the downside. This was not unexpected, because in last weekend’s report I mentioned that I was now likely looking for a drop into an ICL in April or May, and not a run to new highs. Last week confirmed it with the Fed Mtg and the idea that we may now see No Rate Cuts in 2026. That position on rates could change, but the data was indicating high inflation and the economy is steady, thus No rate cut would be needed. Let’s go to the charts and see what is happening now.
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SPX – We have a low that broke the ICL. That is a failed intermediate cycle and that calls for a drop into an ICL over time. That drop doesn’t come immediately, because we can bounce out of the dcl. I really don’t see a second daily cycles dcl yet, so we could bounce out of a dcl this week, but it is now confirmed that these markets do not want to run to new highs at this time.
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THE SPX WEEKLY is actually sitting on support, so that dcl & bounce may come next week. A quick break & recovery is possible as a shake out too.
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I wanted to highlight the sideways choppiness now, because it really does resemble what we went through last year, before a sharp crash into an ICL developed. Take a look at this chart and then I’ll break it down even further.
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SPX:See the chart comparison
1. Last year we had a very mild ICL. This year we had a mild ICL too.
2. The markets then ran to new highs, but started to sputter along sideways in the 2nd daily cycle. We have that now too.
3. Our markets then chopped sideways with fear of Tariffs, Inflation, Economic slow down, etc., and then sold off. We have that now, plus War.
4.Last year we got a DEEP SHARPER A-B-C Plunge into an April ICL. This year?
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THE NASDAQ was equally choppy and weak in early 2025, with hat sharp A-B-C Plunge into an ICL. AFTER THAT, stocks doubled and tripled with a rally out of a V-Bottom. WE WANT TO BUY THE NEXT ICL TOO, especially if this resemblance continues.
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THE WEEKLY NASDAQ is sitting at support and should be due for a dcl too, so we may see that bounce next week and it could last 7-10 days long.
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What can I say about OIL that hasn’t been said already? Oil shot straight up with the war in Iran and remains elevated with blocked Oil shipments. Last week Oil was down 62 cents, but the trading range was wide ($101 to $91). If this continues, we could see a pennant or bull flag consolidation, but…
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WTIC – Oil could also pick a direction to trend in with additional news developing or being released along the way.
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THE USD is churning under resistance, as mentioned last week and in the daily reports this week. This looks like an ICL and if it is, the USD could have a first daily cycle to resistance and a second one that might actually break through. If so, Gold and Silver may react.
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For the sake of the cycle count, I am re-posting what I said about Gold in the Friday report (using Thursdays chart after the Fed mtg.).
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THURSDAY POST FED: GOLD dropped lower on day 32 and then started to bounce back. I’ve been saying in recent reports that when using cycles, we expect a dcl around day 32, right? This could be the low for that first daily cycle.
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Note: The USD dropped almost 1% this week, and GOLD actually dropped 10.5%.
GOLD WEEKLY: This is a BIG drop for Gold as it became due for a dcl. The Fed discussion indicated that rate cuts are not necessary and Gold dropped sharply. We are due for a dcl, and Friday was day 33, so I would expect that we will get a bounce soon.
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SILVER had an a-b-c drop into what should be an ICL after a blow off top. Then a first daily cycle unfolded. It is due for a dcl, but that next bounce may or may not be impressive after this drop.
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AS A REMINDER:
SILVER in 2011 did almost the same thing.
1. It put in an a-b-c drop and then rallied and chopped lower. This looks similar to what Silver is doing now too.
2. Silver also almost broke below that ICL back then, so what happened next?
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SILVER actually rallied out of that low and looked quite bullish, fooling many. So we may have a convincing rally for the 2nd daily cycle next too, we’ll see. Just remember (& I will remind us later), that it rolled over to new lows later too.
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SILVER rolled over and crashed again after that impressive 2nd daily cycle.
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SILVER WEEKLY – Silver dropped & closed down almost 16%. As mentioned above, it is due for a dcl or bounce, and hopefully that happens before the recent low is broken. Breaking that low could cause a rapid sell down of panic selling.
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GDX – Take a look at the miners compared to Gold or Silver. The Feb lows are broken in a big way here. I have said that the Miners often exaggerate the moves of the metals (in both directions) and we certainly see that here to the downside. Read the chart please and this drop really says a lot.
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I mentioned last week (using a March 13 here) that if we got a milder drop and a dcl, I expected a H&S (shown here).
GDX just kept selling off to new lows after the Fed Mtg, even though Gold and Silver did not break to new lows. The uptrend is broken now too. So…
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THE GDX had a BIG drop after the Fed Mtg. It can still give us that H&S pattern, but now it could be on the weekly chart, as shown here. This bounce would be the 2nd daily cycle that eventually rolls over. This could be the last chance to sell up closer to the highs.
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The Fed Week was the icing on the cake to these choppy markets, wasn’t it? We had the markets chopping all around with concerns about the War, fluctuating tariffs, Inflation concerns, Oil prices adding cost to everything being shipped, etc, and then the Fed speech pretty much indicated that a rate cut will not be likely with rising inflation and a somewhat stable economy. The Markets and Precious Metals tanked. We should be due for a dcl, so it may become a ‘sell the bounce’ to lock in gains or possibly even ‘short the bounce’ if anyone is heavily loaded up with Miners.
I’ll continue to watch things over time, and as mentioned last year at this time in early 2025, “You want to see which stock hold up the best to become possible leaders in the move out of an eventual ICL.” Last year RKLB, AAOI, LMND, TSEM, MU, AMD and many others rallied very strongly out of the ICL. Some ran up 400% to 800% for the rest of the year. Could that happen again? It could.
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Example: I’m sure that you recall that I was discussing several stocks like RKLB, AAOI, TSEM, etc . as some of my favorites after that 2025 April crash into an ICL. RKLB simply landed on the 200sma near $17 and it was a buy out of that April ICL. EVEN if you caught it above $20, it eventually ran to $100, and is still up at $75, so another drop to the 200sma may become a strong buy near $50.
So the choppy markets were difficult, and we really didn’t know if they’d break higher or lower in the 2nd daily cycle. The markets are now breaking lower with a failed intermediate Cycle and the Precious Metals sector showed weakness under these circumstances too. The bounce can be good for a week or so, but keep in mind that an eventual sell off or ‘crash’ could take place and really, that is not all that bad if you are mainly in cash. If you are in cash (or if you go short) you have time to get ready to buy the final low. Stay tuned to the reports so that you can be aware of any changes that may come our way, and also it helps to keep track of the markets to see where strength amy be and weakness may be. I hope all are having a good weekend, Bitcoin is below.
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~ALEX
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BITCOIN – The pattern with Bitcoin is playing out exactly as expected so far. As you know, the 4 year cycle drags price down and that can continue with Bitcoin eventually dropping down to maybe the $40,000 area. I have been pointing out along the way that some Crypto Stocks are actually holding up better than Bitcoin, so those could be future leaders when the final ICL of the 4 yr cycle is in place.
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LAST WEEK I discussed how rapidly Bitcoin sold off compared to the last 4-year cycle. I said that this MIGHT indicate that Bitcoin will bottom sooner this year. Notice
1. The Red arrow was the peak roughly in October of 2021 and 2025.
2. The second bounce with the purple arrow made it roughly to the red 50 week ma.
3. The next steep drop was to the orange arrow and that is where we are now. This time the drop was much quicker, so will it bottom sooner? Maybe, and that is what I was pointing out.
4. In 2021-2022 that final period from the orange arrow to the Green ICL is what took us into the final phase of bitcoins drop. A base formed at that point and lasted roughly 3-4 months. That would only bring us to this summer if it were to repeat, so we’ll see. I am keeping an eye on Bitcoin.
