Stocks ended the week with small gains led by the New Economy sector, on the lightest volume in 5 months. The market has rallied 19% for 9 consecutive weeks, even against two weeks in a row of Bearish Weekly Squats that should have, but failed to produce a significant correction. The current rally now just about equals the 19% rally from March 89 to August 89 that lasted nearly 5 months. At least in the short term, the Powell Put has done its work and continues to levitate stock prices. But, let’s remember the Bernanke Put never prevented the Great Recession. However, Mother Nature will not eventually be denied, with a big sell-off just around the corner. Joining our bearish Upside/Downside volume studies, are quadruple Bearish Momentum divergences, a lack of new highs in Market Leadership, and a sharp deterioration in Market Breadth. Look for a pull-back to SPY 274.62, followed by a good bounce, then a move down to SPY 268.32 where the battle for the continuation of the bear will be fought. SPY close under 266 will set up for eventual new lows.
The Precious Metals consolidation we spoke about has arrived, with spot gold declining $56 from 1346 on February 20 to 1290 on Friday. Markets generally are sitting in a broad area of support, and good bounces can be expected, but several weeks of sideways trading is needed, before the bull can reassert itself. Look for base-building over the next 8 -10 weeks, readying for a multi-week breakout to begin around end of April which will take gold through 1400. GLD Fib support 121.49 – 119.62 (strong). SLV Fib support 14.17. GDX Fib support 21.26. Monthly close over XAU 78.45 will turn Monthly trend bullish.
A strong Friday bounce brought the greenback positive for the week (UUP 25.74). Look for a strong close under UUP 25.57 to turn our 89 period trends lower, and a bear trend to begin.