Violent and unexpected wild swings characterized stock trading last week, exemplified by the nearly 3.0% swing from Thursday’s low to the close in just the last hour of trading. The new reality: More than 80% of stock trading is incredibly fast — controlled automatically by machine algorithyms and passive investing — without any human intervention. With the reversal of the Primary Trend having been established, according to Dow Theory, and not an arbitrary 20% off the high, its important to understand that the market has changed after 11 years, and buy and hold is not a formula for success going forward. For the week, stocks gained 3.0%, led by the New Economy sector which registered an 8 week high when compared to the Old Economy. At least a few more weeks of choppy, violent trading is likely, as stocks continue to work off the previous Bullish Momentum. For the first time in recent memory, not a single stock registered a 52 week high on the NYSE. SPY Fib resistance 257.15 – 263.51 (strong). An important high day is due on January 11.
As stocks were going through its gyrations, spot gold surged, crossing over its 55 week mvg avg (1256.96) closing the week 1280.20, and registered a 7 month high against the Dollar. Important Fib targets spot 1294 – 1310. GLD resistance 122.44. The shares gained 1.5% and lagged the metal, but Weekly Bullish Momentum surged to an 11 week high. GDX resistance 21.70.
Silver gained 5%, gapping over a 4 month sideways trading range trapping shorts. SLV Fib target 15.07 (spot 15.82).
The Dollar fell 2.0% (25.50) into our key Daily 89 trend lines. A strong close under 25.45 (convergence of our fast and slow 89 lines will project UUP 24.68 – 24.32 (strong) and the start of a new down trend.