While we were wrong anticipating an immediate decline, stocks plodded through a holiday-shortened week of sideways trading, seemingly waiting forever for good news on a US/China trade deal, before ending the week with less than a half of one percent gain. It’s obvious, the market has become totally manic, following with the best January in 32 years, after the worst December in 87 years. With all indications abound that the economic back-drop is tanking, (too numerous to mention) the stock market decline is far from over. At a minimum, we expect a 35% decline off the highs. The low cycle day appears to have inverted with a high day now arriving on Feb 22/25. Our Upside/Downside Volume studies remain bearish along with Bearish Momentum Divergences. In addition last week was another classic Bearish Weekly Squat with the smallest range in 6 months, giving us two back-to-back Bearish Squats. SPY Fib support 267.16 – 263.71 (strong).
Spot gold rose $7 on the week, (1327.70) after almost achieving our maximum target for this move (1349). Actual high 1346 on Wednesday 2/20/19. A further consolidation is expected to last, at a minimum, until March 12, for both the metal and shares. A 4 month high in share volume (in a holiday-shortened week), and Weekly Bearish Momentum Divergence showing up, will likely put in a short-term top. GLD Fib support 122.56. GDX Fib support 21.92 – 21.26 (strong). SLV Fib support 14.64. In classic bullish fashion, the shares continue to lead the metal, recording an 18 week high vs gold. Look for a Monthly close over the XAU (4 more days) of 78.45 to turn Monthly trend bullish. XAU Fib resistance 82.12 – 82.60.
The greenback weakened over the holiday week, but held Fib support UUP 25.65, closing 25.72. Look for a strong close under UUP 25.57 to turn our 89 period trends lower.