Stocks plunged 2.9% on tariff threats to Mexico — met our criteria for a Weekly close under 280.57 — turning our 89 line trends lower, and are now 7.3% off the highs, confirming the bear market started last October on a Dow Theory sell signal, which was never refuted despite the 6 month rally. Average bear market lows have sliced close to 60% off the major averages over time. This bear market will likely be led by the Transports and the New Economy sector. SPY Fib support 271.01, 263.43. SPY Fib resistance 281.64, 288.80, 290.43 (strong).
Despite all-out war against gold by the cartel, the rush to safety on Friday was self evident, as the metal soared to close 1304.90 — a 10 week high — after trading 1274.20 a day earlier. The gold shares (XAU) gained more than 5%, and regained leadership despite the stronger Dollar. Our call for a low in the shares off a Triple Bullish Momentum Divergence was correct. Trends have turned bullish for the metal with the GLD closing 123.33. GLD Fib resistance 124.39. More work is needed for the GDX which needs a strong close over 21.76. Actual high 21.74. GDX Fib support 21.30. Silver, which has been artificially beaten down through excessive paper shorting — having excessive EFP’s going to London for paper settlement — has the biggest potential with the gold/silver ratio at 85, and over the coming bull market, has the potential to drop to 30. SLV needs a strong close over 14.26 to turn trends bullish. An SLV print 14.05 will bust the bullish falling wedge formation, leading to much higher prices.
After the big reversal down last week, on renewed chaos in the currency markets, the greenback found a temporary bid and surged to test multi-year highs – before failing — to close with a small gain for the week. A strong close under UUP 25.94 will turn our trends lower, and the start of a bear market.