With last weeks resurrection of the New Economy sector into new high ground, a severe market downturn is off the table — for now! However, our bearish outlook remains intact with the Transports still 7.5% off the highs. More likely from these all-time high levels, is a “garden variety” correction in the 4%-6% range, (taking back a chunk of the 14% rally over the past 8 weeks) which would take SPY to solid Fib support in the 290 – 284 levels. From there another test of the highs. This would take the market into the October time frame, where stocks again become vulnerable, as the New Economy sector breaks down. The Bearish Momentum set-up has been completed with last weeks rally, Upside/Downside volume and Market Breadth remain solidly bearish, with the lightest volume in nearly a year. A Weekly close under 289.53 turn our 89 line trends bearish.
To prevent a spike in gold over 1435, the banking cartel threw a voluminous amount of paper at the market on Thursday, driving spot from 1433.80 to 1411 and back to 1425 before closing 1418.30, down $7 on the week. The shares, following the metal, ran into Fib resistance (GDX 28.36) before falling back to settle 27.28. GDX Fib resistance 30.70. GDX Fib support 25.97. GLD Fib resistance 143. GLD Fib support 132.87. Looking at the shares longer term, using a monthly chart, the XAU shows a May breakout over a 3 1/2 year period from a Monthly Bullish Falling Wedge formation, projected to 113 this year, and 198 over 2-3 years. Turning our attention to the least loved and most manipulated precious metal, silver has started to wake up from a multi-year slumber. The gold/silver ratio has dropped from 92 to 86.5 the past several weeks. With our gold projection of 1670 this year, and a gold/silver ratio falling in the intermediate term to 60, silver would be projected to trade to 27.83. SLV Fib res 15.73. SLV Fib support 14.56.
New high ground as the world scrambles for the Dollar (UUP 26.58). Weekly close under 26.14 to turn tends lower. 25.75 for support