Under a constant barrage of positive news on the trade front, including a delay of tariffs and a potential interim trade deal, stocks gained 1.2%, pushing SPY to barely new all-time highs (302.46). The Transports still remain 7% off their highs, and the New Economy sector has not reclaimed new high ground. We allowed for the possibility of new highs, but with a Bearish Weekly Squat having formed, and with stocks over-bought, a decent correction should follow, with SPY 293.08 as solid Fib support. While a minor low is due around September 18, a more important low comes in October 2/4. Despite new highs, our ADX is still low (in the 18 range), and unless last weeks rally is part of a new leg up, the range-bound market we foresee over the next 3 weeks, will bring ADX close to “big move” territory. A break under SPY 291.42 (convergence of our two 89 lines) will turn trends sharply lower, as we head into the October/November time frame.
The metal and shares are going through the September correction, with the shares leading the way, having corrected 12.6%. Spot gold made its high September 2 at 1557.70. On September 11 it made its low print at good support 1484.10. A sharp rally to 1525 was followed by a weak Friday close 1488.40. Potential low for spot 1465. GLD Fib support 137.77. We expect the volatility to continue in a two-way market until a cyclical low on October 1/3. Gold has still not fulfilled its near-term price objective 1670, but should do so after the correction runs its course, in the October/December time frame. GDX Fib support 25.52. SLV Fib support 15.66. Longer term Monthly resistance levels for the PM’s: GLD 153.15, GDX 33.63, 46.37 SLV 26.19, 34.63.
A volatile week for the greenback ended with a minor loss (UUP 26.72). After a recent multi-year high (UUP 27.01) followed by a gap-down day and dead-cat bounce, the dollar should be heading toward the