With the General Market gaining 1.3% last week, led by the New Economy sector (all in the last 3 days, after the Fed took a pause in raising interest rates, and floated good news about a breakthrough in US/China trade talks), stocks have tacked on an amazing 15% from the December 26 low (SPY 233.76). Not uncommon after an initial bear market low. With economic data worsening (almost 20 large, bell-weather companies have lowered forward guidance), it’s likely stocks are close to a terminal point, having reached strong Fib resistance SPY 271.01 (actual high 271.20). Bearish Momentum is finally showing up — a necessary prelude to the coming decline — stocks should enter a choppy, trading period, over the next two weeks, before heading sharply lower. Fib support 253.34 – 251.04 should arrest the initial decline.
Spot gold traded 1326 on Thursday, before pulling back Friday to settle 1317.50, up $15 for the week. The gold shares led the group gaining nearly 7%, with XAU settling 75.91, and firmly establishing strong leadership, recording a 6 month high vs the metal. Daily bullish momentum went off the charts, reaching a 27 month high. XAU resistance 82.12 – 86.70. Look for a monthly close over 78.45 to turn Monthly trend bullish. GLD res 125.57. SLV ran into Fib resistance 15.07 – 15.12. (Actual high 15.19) before settling 14.92. A brief period of consolidation is likely.
Trapped shorts for the 4 month period between 8/18 – 12/18 will provide support under the market on any good pullback.
With the Fed standing pat on interest rates, the Dollar fell slightly, and should start a decline towards Fib support
UUP 24.68 – 24.32 (strong).