The Right Way To Trade

The Right Way To Trade

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Stocks, Gold & Dollar Commentary November 4, 2019

Stocks
Stocks had the wind at its back. The week started with rumors of a successful trade deal with China, in anticipation of a rate cut by the Fed, and ended with a better than expected jobs number, to propel stocks through our projected “3 drives to a top”¬†bearish formation SPY 302.63, and end the week at new all time highs (306.14) — both for the New as well as the Old Economy sectors. While our technicals remain solidly bearish, (in addition back-to-back Bearish Weekly Squats) only “run-of-the-mill” corrections can take place, as long as the New Economy sector continues to out-perform the Old Economy. The maximum upside target is SPY 311. Maximum downside between now and year-end looks like 295 — unless the New Economy were to break down badly.
Gold
The metal had an extremely volatile week, with a $62 range, (low 1480.60) ending near the high (1514.50), but came in second to the shares (XAU) which closed on the highs (95.94 up 2.6% and 9 week closing high). The break-out level for spot gold is 1521, which should start the bull move to 1670. Spot silver had a small gain to close out the week, after spending most of the week in negative territory. We expect silver to lead the metals higher, and to keep shrinking the gold/silver ratio, in the intermediate term, to the mid 60′s. Spot silver has the potential to print 26.59 as gold hits its objective. In the near term GLD resistance 143.91, GDX resistance 28.87, SLV resistance 17.76.
Dollar
The greenback attempted to rally, but the Fed rate cut doomed the rally and closed under our merged trendlines (UUP 26.63) to close out the week, (UUP 26.58) and is headed to Fib support 26.30, and eventually 25.81 (strong).

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