The market finally succumbed to serious selling pressure, on the back of a Bearish Weekly Squat, after probing for new highs — but falling short — on Thursday, finally losing less than 1% on the week. While all of our technicals remain solidly bearish, the big takeaway: The resilience of the New Economy sector when compared to the Old Economy, coming within a fraction of new highs. While this doesn’t rule out a good correction, it takes off the table a market crash at this time. We expect a continuation of the correction, on the back of another Bearish Weekly Squat, which should take SPY to good Fib support 293.08. We expect about 3 more weeks of choppy, range trading, with stocks becoming vulnerable to a bigger down-side move around October 11/14, when Bearish Momentum divergences set in, and an important cycle high is due. It is critical to see how the New Economy sector behaves during this period. A Weekly close under SPY 292 will turn our 89 line trends lower.
As mentioned last week, gold is going through its September correction with a lot of volatility and two-way trading. Starting on Monday from a high of 1513, to what may turn out to be the cycle low for the period, 1482.70 on Wednesday, spot rallied to close on the highs Friday 1517.70. The gold shares out-ran the metal, gaining nearly 6%. (XAU 94.60). Our cycle low is projected for Oct 1/3, so we expect more of the same, over the next few weeks. Silver has under-performed recently, but will start to close the gold/silver ratio on gold’s move to spot 1670.
GLD sup 137.77, GLD res 143.92, SLV sup 15.66, SLV res 17.76, GDX sup 25.52, GDX res 28.87, 29.38.
The greenback chopped in a narrow range (UUP 26.86 – 26.72) over the 5 days, closing near the highs (26.83).
With interest rates heading for the zero-bound, the Dollar should break the uptrend, with a Fib target 26.47.