Stocks On the strength of the “ceasefire” between Trump and Xi, stocks rallied into new high ground, with a theoretical SPY high of 299.10 recorded in overnight trading on July 4. However, the dynamics of the confrontation of the trade war has not changed. More problems on the trade front are still ahead of us, which will help instigate a recession, and trigger the bear market. On the technical side, our Volume Studies remain bearish, the New Economy sector has not regained leadership, Market Breadth is still lagging — thus, all systems are go, once Bearish Momentum Divergences have completed their set-up — likely by July 17. The first level of Fib support SPY 291.40. A Weekly close under SPY 286.40 and the bear is well underway.
An incredible volatile week for the precious metal, thanks to a desperate banking Cartel, which caused swings from 1409 to 1382, back to 1435 (high) to 1387, finally settling 1400. However, the 5 year break-out cannot be stopped, and the gap on GLD at 128 will not be filled, as a potential parabolic move may be underway, with spot 1670 as a measured target, based on a H&S bottom formation. Taking a much longer view, the potential for gold is much greater. The last bull market, covered 10 years, and took gold from $230 to $1900, a factor of 8. The fundamentals this time are much more bullish, with debt levels in the stratosphere, and the global economy much less secure, a factor of 8 would take a gold reset to over $8000. Think Bitcoin $18000 and the price is more than reasonable once “gold fever” hits. GLD Weekly Fib Resistance 143.00, 153.15, 167.60. The gold shares followed the metal, ending the week with a small minus. GDX strong resistance 49 – 52, which is faraway but will get there on the gold move. Silver remains the PM step-child, controlled by the Algos. At some point, every last ounce will be bought and delivered before the Algos lose control. SLV Fib resistance 14.74.
The truce on the trade front brought Dollar strength, (we were wrong) and the UUP promptly gapped back over our 89 line trends to bullish. At the onset of the stock market bear, we expect the Dollar to weaken. A Weekly close under 26.08 will turn the Dollar bearish.