News that Trump and Xi agreed to meet at the G20 in Japan on June 28 to discuss trade, drove the SPY to new highs on Thursday (SPY 296.44). On weakening Breadth, the SPY new high was not confirmed by the Transports, which remain nearly 1300 points from new highs, and the New Economy sector, falling short by nearly a like amount on a percent basis. As we suggested, stocks will need time to work off the bullish momentum, from what is now a 9% rally that started on June 3. This process of creating Bearish Momentum Divergences will need a few more weeks to complete. Once complete, we expect stocks to resume the bear market. A key level of support that needs to be broken on a Weekly close is SPY 284, for the bear to start in earnest. SPY Fib support 289.83.
The metal had a break-out week, soaring to 1406, settling 1399. GLD has a huge gap at 128, and it remains to be seen whether this will be closed right away. With the cartel still intent on suppressing gold, a retest of the breakout is a distinct possibility. On an intermediate term basis, spot 1670 is a realistic price this year, which would fulfill a H&S bottom price target. Longer term, we expect to see 2500. Silver followed gold, with SLV clearing 14.16, turning our 89 line trendlines bullish. SLV Fib resistance 14.74 (spot 15.70). The gold shares rallied 8%, and despite bullion strength, managed to register a 10 week high against the metal and nearly a yearly high against the Dollar.
The greenback closed the week on a downer, (UUP 25.95) losing 1.4%, and closing under our 89 line trendlines, indicating a bear trend is beginning. The Dollar (UUP) should find support UUP 25.72 for a bounce.