The pending trade deal is the gift that keeps on giving, as stocks continue to set new all-time highs, (both Old and New Economy) all the while complacency is at 5 year lows. The VIX touched 12. SPY reached its big target 311 (actual high 311.84) while cross currents rage on. Consider this takeaway: While stocks are making new highs, 3 month highs were made in new 52 week lows. Stocks are now up 5 weeks in a row, with prices far out-running volume (3 week lows maintaining bearish Upside/Downside volume) precisely when the Fed hosed in $250 billion in fresh liquidity, against an economic back-drop of near recession levels in Europe, and falling GDP in China and the US. We expect a trading high next week, with only a minor sell-off, (2-4%) until the New Economy stocks break down. Initial SPY Fib support 306.71, then 303.85.
After the biggest sell-off in years, the metal made 15 week lows (spot 1444.90) and closed the GLD gap from August 2, then rallying to Friday’s close 1468.30, an upside reversal, closing over the midpoint of the Weekly range (spot 1444.90-1475.50). The gold shares (XAU) led the group, tacking on 2%. GLD, GDX and SLV came close to their respective Fib support levels 135.89, 25.65 and 15.38 before closing higher on the week. For clear breakouts look for GLD Weekly close over 141.96, GDX Weekly close over 27.90, SLV Weekly close over 16.80. Yet to be met spot gold price objective 1670, which will mean a potential spot silver 26.59 on a gold/silver ratio falling to the mid 60′s.
The greenback weakened Friday (UUP close 26.80) after holding firm for 3 days at 26.92. A Weekly close under UUP 26.67 will turn Dollar trends bearish, looking for 26.30 and eventually 25.81.