Crosscurrents gripped stocks last week on the lightest volume in 3 months. The net result was a fractional gain or loss depending on the index. A new high in daily Bullish Momentum, as well as new highs in the New Economy sector means more sideways chopping action is needed for the bullishness to be degraded. On the other hand, our Upside/Downside Volume studies along with Market Breadth maintained strong bearish readings. In the short term expect the market to move lower, primarily based on the failure of the British Parliament to approve the Brexit agreement, instead seeking an extension. This should roil the market in the early going. Fib support should show up SPY 295.38 – 293.36. A Weekly close under SPY 293.30 will turn our 89 line trends bearish, with the market seeking strong Fib support 287.10. Not surprising, with all the crosscurrents, the cycles inverted with the low day becoming the High Day on Oct. 17. Low Day expected Oct. 25/28. Longer term we expect to see SPY 265 – 263, but only after a breakdown in the New Economy sector.
The metal spent most of the week on the downside, with the narrowest range in 9 weeks, but managed an up-close by weeks-end (spot 1490). The main takeaway, however, was the reclaiming of leadership by the shares, with XAU gaining 2% (90.53). Coming off back-to-back Bullish Weekly Squats, and with Bullish Weekly Upside/Downside Volume numbers, along with Bullish Momentum divergences, the stocks are primed to move higher. GDX resistance 28.87, 30.00. GLD resistance 143.91. SLV resistance 16.86. Spot gold needs a 1521 print to continue its bull move. Intermediate term target for spot gold is 1670. Silver is ready to out-perform gold, and with the gold/silver ratio dropping into the mid 60′s, expect spot silver to touch 26.59.
Considering the recent 4 month Dollar rally, last weeks drop – creating a 2-month island – was ominous though only down 1% for the week, hitting our downside target. (UUP 26.55). Strong Fib support 26.29.