A strong eight day bounce sent stocks rallying 8% off the low (SPY 259.85) to 281.22, but netting just 2.2% on the week (277.76). Three important takeaways: A nine month high in Daily bullish momentum was recorded, meaning time is now needed to work off the bullish momentum, while, at the same time, a 10 month low was registered when comparing the New Economy sector vs the Old Economy. Clearly, New Economy leadership is all but gone. Finally, with a decline of about 6% in Weekly Volume, volume failed to keep up with price appreciation, bringing our Upside/Downside Volume study into negative territory, once again. With the first cycle top coming on schedule (November 7), a more conclusive high is due around November 23, which fits with our volatile, choppy sideways trading scenario over the next few weeks.
While most stock markets were in disarray, the gold cartel made certain gold and silver were not considered “safe havens”, as paper selling pushed the metal below 1220 support, to a 1206 low, settling 1209. This was accomplished with the the COMEX Gold Deliverable Ratio at the 2nd all-time highest — 358 claims for every ounce available for delivery. (meridianmacro.com) The shares (XAU) fell 4.5% on 20% less volume, as our Upside/Downside Volume studies strengthened. Bullish Momentum divergences are falling into place. We anticipate another 1-2 weeks of sideways trading before an Upside breakout. This should coincide with a break in stocks.
After a weak opening, the Dollar (UUP) closed slightly higher (25.83) on the way the major Fib resistance UUP 26.04.