The Right Way To Trade

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Stocks, Gold & Dollar Commentary October 7, 2019

Stocks
Stocks had a wild week, collapsing 4.6% from the Tuesday high to the low on Thursday, (gapping under, and then back over, our two 89 line trendlines) staging an impressive rally to end the week just slightly lower for the 5 days. (SPY 294.35).  The big takeaway: Despite the New Economy sector recording an 18 day low against the Old Economy sector one week earlier, the New Economy stocks bounced back, and registered all-time highs on Friday, when comparing the two sectors. For this reason, a market crash is ruled out at this time, and we should only expect a fairly modest correction, as we head to any potential low (max SPY 263.77) into next year, as the trade war plays out, and the election season heats up. Just ahead SPY Fib resistance 295.68, 297.42.
Gold
The metal crashed to a major low on Tuesday (spot gold 1458.60) then traded up to 1515 on Friday, on news of a rapidly softening economy and tepid jobs report, closing the week 1504. The XAU made a 9 week low, on a 10 week low in range, generating a Bullish Weekly Squat, which should take the market higher (but not new highs just yet). Bullish Momentum divergences needs to form, and another 3 weeks of choppy sideways trading is the preferred scenario, with a high day expected October 16/18. Spot target for gold remains 1670. GLD res 143.91, GDX res 28.87, GDXJ res 40.98, SLV res 16.86, SIL res 30.88.
Dollar
The greenback made a stab at our max projected high UUP 27.16. Actual high 27.17, then fell to close 26.96. A 26.85 print breaks an enormous rising wedge formation with an initial target UUP 26.59. Fib support UUP 26.50 (strong).

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