As in recent typical fashion, stocks showed early weakness, only to recover, in the face of the Fed raising interest rates, and end the week with less than a 1% decline. Masking this relative stability was a continued slowdown in Momentum, which has now developed quadruple divergences — that has now turned negative — as the “elevator” has definitely slowed. Even with stocks within striking distance of new highs, Breadth has turned negative in the almost doubling of 52 week lows compared to highs, while Upside/Downside volume has given off a single bearish reading. The upshot: We’re still waiting for a heavy dose of Downside Volume, as October begins, to be followed by a failed rally over the next 4 weeks. Downside SPY targets 278.35 – 273.94.
The metal started the week higher in Asian trading, which turned out to be the high for the week (1203.70), followed by cartel paper selling, desperate to keep gold under 1200 (spot low 1180.60) but ending Friday on a strong bounce (1192). Multi-week bullish Upside/Downside Volume on the shares strongly indicates the metal is ready to move higher, with the spot low (1167) having been made 7 weeks ago. Silver showed relative strength, gapping up 40 cents Friday to a 4 week high (spot 14.64). The 55 week mvg avg for spot gold 1263.52.
On higher interest rates the Dollar (UUP) bounced to a 3 week high (25.26). Fib resistance 25.53 – 26.04 (strong). Fib support 24.60 – 24.32 (strong).