Virtually unprecedented volatility characterized the 4 trading days, with the SPY range totaling nearly 18 points (280.46 – 262.44), closing near the lows (263.66), dropping 5% for the week. As we suggested, time is needed to neutralize the 10 month high in bullish Daily Momentum from the prior weeks trading, and fill-out the right shoulder of a H&S topping formation. A strong bounce is, therefore likely, with a high day due around mid-week. Choppy, volatile trading could extend into the New Year. Once complete, a break to new lows, projects SPY 227 – 226, over several months, into bear market territory. In the near term, SPY Fib resistance 273.54 – 276.56. SPY Fib support 260.00.
After 3 weeks of gold settling around 1222, the metal broke through Cartel resistance – cleared 1233 — to close 1248.50 on the week. Near term objective: 1310. The shares (XAU) rallied 5.4%, re-establishing leadership over the metal, recording a 7 week closing high. We’re starting to monitor GDX which gives us another look at volume. The 55 week mvg avg for spot gold is 1256.88.
The greenback turned lower, not able to clear strong resistance (UUP 26.04), settling 25.80. A strong close under 25.45 (convergence of our fast and slow 89 lines will project UUP 24.68 – 24.32 (strong).