Stocks finally had a bit of comeuppance, — falling in line with our Bearish Squats — suffering the deepest drop (3.1%) since the rally started on December 26. A last hour bounce limited the damage to 2.0%. The sell-off was accelerated by a bearish Jobs Report, highlighting the slowdown in the economy, with only 20,000 new jobs created. SPY broke through our downside target 274.62, spiking 200 points lower, before finding a good low (272.46). We expect a high day March 15/18, with strong Fib resistance 278.91. Throughout the sell-off, the New Economy stocks continued to lead the market. We expect this sector to weaken as the bounce peaks out. SPY Fib support 270.84 – 269.60.
The PM’s were under pressure most of the week, with spot gold trading down to 1280.90 on Thursday, $65 off the 1346 high on February 20. The weak Jobs Report sparked a rally, (against the sure-sign of stagflation, with wages growing 3.4%, the fastest spurt in 10 years within a slowing economy) and spot gold rallying to 1301. GLD Fib support (121.49) held, closing 122.84. SLV Fib support (14.17) held, closing 14.41. More choppy, sideways trading for several more weeks is likely, with a challenge, and break-out to new highs end of April – early May. The gold shares (XAU) gained 2.6% after early weakness, and were even higher against a strong Dollar. Spot gold 55 week mvg avg 1264.71. Monthly close over XAU 78.45 turns Monthly trend bullish.
Holding our 89 line trendlines, the Dollar (UUP) rallied to challenge the recent highs (UUP 26.12) stopping 26.07, before settling 25.99. Look for double-top and break below 25.57 to turn trends lower, and bear trend to begin as gold breaks above 1400.