Stocks will likely have a brief rally when the futures start trading Sunday night, on a Trump “blink” allowing Huawei to, once again, buy high tech equipment from American firms, in exchange for the purchase of farm products from the US. The farm vote is essential for Trump to get re-elected in 2020. The gains will be fleeting, with the US heading for recession. Our Upside/Downside Volume studies remain solidly in the bearish camp, despite the recent run-up. We’ve been waiting for Bearish Momentum Divergences to show up, and they have already, and will intensify after the July 4th holiday. Market Breadth is bearish and the New Economy sector is still 4% from the highs, and is still significantly off the highs when compared to the Old Economy. To kick-off the bear, look for a SPY Weekly close under 285.60. SPY Fib resistance 295.00, 296.44.
The metal continued its break-out week by trading to spot 1438, only to be bombarded, in what may have been a record volume of Cartel paper shorts, driving the spot price to 1399.50 on the low, before settling 1409. I repeat from last week: 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 added 2.5% to last weeks 8% gain, and show more than a 30% rise in 5 weeks. The perfect gold call option position going forward from here is a fully paid for junior gold corporation (or junior ETF) with proven reserves, highly leveraged to the gold price, (mining costs all-in close to current gold price) in a jurisdiction with international treaties, with history of rule-of-law. These stocks have never been cheaper when compared to the S&P. GLD Weekly Fib Resistance (which will NOT change) 143.00, 153.15, 167.60.
The greenback (UUP) barely moved, closing slightly better (UUP 25.97). With China and the US back talking, there should be good movement (down) starting next week. UUP should find support 25.72.