The market attempted to correct twice last week, only to be rescued by the unusual strength in the New Economy sector, which went on to new, decade closing highs. Volume was extremely light in pre-holiday trading. Market Breadth weakened considerably, which should lead to a continuation of the market correction — but no more than 3.5%, at this point in time, before a decent bounce to challenge the highs. SPY Fib support 284.36 – 282.13.
The metal was weak, falling $15, to settle at 1275.50, after testing the bottom of our projected support level 1271. Actual spot low 1270.50. Mid to late April is when a low should be seen in the PM’s, followed by a breakout around mid May, although there is a wide variance, due to constant rigging in the paper markets. However, Mother Nature will not be denied. This Summer should see explosive moves in the PM’s. A strong close in spot gold over 1360 will project to 1600. GDX Fib support 21.00. SLV Fib support 13.90. Look for strong close over 14.40 to break out of top of giant falling wedge formation, to run to 14.74 and 15.69 Fib resistance. Spot gold 55 week mvg avg 1267.73.
Contributing to gold weakness was considerable strength in the greenback, which surprised us and rallied to 2 year highs (UUP 26.14). UUP 26.82 represent a milestone and 10 year highs.