Wild and unexpected swings continue to characterize the markets. On news of a strong jobs report, stocks surged 3.5% on Friday, and have now clawed back 8.1% from the low (SPY 233.76) registered on December 26. With the current rally, the market has worked off the bullish momentum we’ve been waiting weeks for. With a 10 week low in range, a Bearish Weekly Squat was registered. It’s likely the Weekly Range will narrow further, as stocks approach strong resistance. The New Economy sector failed to lead the rally, recording 4 week lows vs the Old Economy. With the reversal of the Primary Trend, its only a matter of time before the markets break to new lows. But first, it’s likely a few more weeks of wild swings, with SPY 257.15 to a max 263.51 as important Fib resistance targets. An important high day is due around January 11.
Bullion surged $18 to spot $1296, — a 7 month high — before falling back on heavy cartel selling, settling 1284.20. The shares (XAU) surged 3.1% closing 71.87, a 5 month high. GDX, the largest gold share ETF was equally strong, and face important Fib resistance at 21.70. The gold shares reclaimed leadership over the metal, registering a 3 month high. Spot gold (1284.20) is now 2 consecutive weeks over the 55 week mvg avg (1257.45).
The Dollar continued to fall into our key Daily 89 trend lines, closing UUP 25.46. 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.