On news of an impasse on trade negotiations between the US and China — and the threat of additional tariffs — stocks fell for 4 straight days, but finally found support on Friday near Fib support SPY 282.13 (actual low 282.30), a decline of 4.6% from the recent high SPY 294.95. As expected, the New Economy sector led the downside, recording a 5 week low when compared to the Old Economy. Strong Fib support SPY 277.65. Unless China retaliates strongly by imposing tariffs on US goods and depreciates the Yuan by more than 2%, the market should bounce from an oversold condition, in choppy fashion, to SPY 291 – 293, with a major top around the end of May.
While spot bullion recorded a four week high (1291.20) settling for the week 1286, the shares (XAU) continued to struggle, falling 2%, settling 67.29. Volume fell off dramatically, registering 18 week lows, and less than half when highs were being made 2 months ago. At this point, the shares are not being viewed as a safe haven. We expect the stocks to re-establish leadership when stocks top out, and enter a bear market. Spot gold strong support 1248. Spot gold print 1325 will put low in. Weekly close over 1360 will start run to 1600. GLD Fib resistance 124.39. SLV Fib resistance 14.73. GDX Fib resistance 22.50. Gold 55 week mvg avg 1268.56.
The greenback continues to serve as a safe haven during the tumultuous stock and bond markets, and closed little changed UUP 26.15. The Dollar will be heading lower after stocks top. UUP Fib support 25.89 – 25.80.