For the shorts, it was torture by a thousand cuts, as stocks eked out gains 4 days in a row — after a sharp down Monday — but in the end managed less than a 1% gain, on the lightest volume in 12 weeks. Stroked by Fed Chair Powell after 2 days before Congress, who left no doubt that the Fed was going to save the economy with an interest rate cut in July. With the incremental gains last week, the final set-up for Bearish Momentum has now been delayed to around July 24. The Transports lag badly, and are still 8.5% off the highs. The New Economy sector is now in overbought territory when compared to the Old Economy, and has still not gone to new highs. Market Breadth is weak with only 3% of stocks on NYSE registering new 52 week highs. The initial sell-off should find Fib support at SPY 296.50 for a bounce.
Another volatile week for the precious metal — which found solid physical buying throughout the week at support levels — ranged from 1386 to 1426.50, settling 1415. What we’re seeing is normal price action after the recent breakout above 1360. The potential exists for a parabolic move to 1670 during the Summer, triggered by an ultra dovish Fed. GLD Weekly Fib Resistance 143,00 153.15, 167.60. The gold shares (XAU) continue to outperform the metal, registering 48 week highs. Silver has lagged badly, controlled by paper short sellers, who sell just enough every day to contain prices. At some point, every ounce will be taken and the algos will lose control. Near term Fib resistance SLV 14.74.
We were one week early on a Dollar (UUP) reversal. Look for Weekly close close under UUP 26.11 to turn trends lower and Fib target 25.72 for support.