Stocks took out the upper boundaries of the trading range — and rallied 1.8% on punk volume — on hope that a trade deal will be forthcoming at the next scheduled meeting between the US and China. Last weeks rally makes it possible SPY may touch new highs, (302.23) although doubtful — but overall our outlook has not changed — as long as the DJTA does not confirm the move. Other technicals remain the same: Weak market Breadth, bearish Momentum divergences and Upside/Downside Volume and lackluster New Economy leadership point to a range-bound market with initial Fib support SPY 291.43. A cycle low day is due September 16/18. Weekly close under SPY 290 turns trends lower. Fib support 275.66 – 266.09, with the maximum decline of 9% – 12%, at this point in time.
It was a wild week for gold, with spot trading to new highs on Wednesday (1557.70) before tumbling to 1502.40 on Friday, settling near the low 1506. The gold shares never confirmed the bullion rally, having made their high on August 28 (XAU 102.29), and then fell nearly 8%, closing Friday 94.26, just off the weeks low. A few more choppy trading weeks are needed for the correction to play out, with a tentative low date October 1. Our intermediate term spot target remains 1670 after the correction is over. GLD Fib support 137.77, GDX Fib support 27.63. SLV Fib support 16.26. Longer term Monthly resistance levels for the PM’s: GLD 153.15, GDX 33.63, 46.37 SLV 26.19, 34.63.
The greenback made new multi-year highs as the Labor Day weekend came to a close (UUP 27.01) but could not hold the gains, closing lower by Friday’s close (26.77). A Weekly close under 26.38 will turn trends lower. UUP Fib support 26.49, 26.28.