With new all-time highs in the New Economy sector, (and, also when compared to the Old Economy) as a very mixed earnings picture pour in, the most the bears can expect is normal corrective action over the next couple of weeks, as stocks work toward an immediate high, based on a “3 drives to a top” (SPY 302.63) bearish formation. The algos were in control last week, gaining 1.5%, though muted, on the lightest volume in nearly a year, coupled with the smallest range in 5 months, creating a classic Bearish Weekly Squat. Bullish Momentum has been degraded sufficiently for a decent correction to take place. Upside/Downside Volume and Breadth remain bearish. SPY Fib support 297.97. A Weekly close under 294.07 will turn our 89 line trends bearish.
After trading down to 1481 to start the week, the metal came back surprisingly strong on Friday, to rally to 1518.70 (on generally weak economic news) shy of our 1521 breakout level, settling 1504.50. The shares followed through on back-to-back Bullish Weekly Squats, continuing to lead the metal, gaining 3.3%, on a 3 week high on trading volume. With Upside/Downside Volume hitting 8 week highs, a pause in the bull move is likely. Spot silver gained 3.0%, outpacing the yellow metal. GLD resistance 143.91. GDX resistance 28.87. SLV resistance 17.76. Spot gold intermediate term price objective remains 1670, with silver touching 26.59, as the gold/silver ratio drops to the mid 60′s.
After hitting our downside target UUP 26.55 (actual low 26.54) the greenback bounced to 26.75 by Friday. Sideways, choppy trading with an upside bias is expected, with a maximum UUP 26.89 over the next few weeks. Look for an eventual close under 26.55, for a drop to strong Fib support UUP 25.81.