After spiking higher on Monday (almost reaching our upper SPY boundary 274.90 – actual high 274.08), the market closed the week with less than a 1% gain, on the slowest volume in 5 weeks. recording the smallest Weekly range in 4 months, producing a Bearish Weekly Squat, pointing to immediate downside SPY targets 266.62 – 264.48, where heavy downside volume needs to occur for any semblance of a future major top. At this point in time, there is nothing on the immediate horizon, other than a modest 2 – 3% correction, which should be followed by another rally towards the upper end of our boundary. The new Economy sector gave up some ground which was expected. Upside/Downside Volume remains positive. Bearish Momentum divergences can only occur after the next rally. Breadth remains adequate as 4 month highs were recorded. In the event 274.90 is penetrated, look for 279.81 as major Fib resistance.
In what appeared to be total desperation, the banking cartel unloaded 13,500 Comex gold paper contracts in less than 1 minute ($1.75 Billion) on May 15, driving the metal down $25. Spot closed Friday on a small bounce to 1292, holding above its 55 week mvg avg 1277.47. The shares (XAU index) held up fairly well, dropping 2%. Supporting the cartel was the continuing strong Dollar which gained another 1 1/4% to 7 month highs, crossing above our Weekly 89 line. Spot gold closing over 1322 is bullish. An XAU close over 86.71 for 3 consecutive weeks should see a rapid run to 105.49. 84.84 should provide minor resistance.
We were wrong on an immediate Dollar (UUP) correction. Instead, on higher interest rates, the UUP closed above the Weekly 89 line (24.38) Two more weeks of consecutive closes over 24.38 turns the Dollar trend up. UUP 25.05 remains long term Fib resistance.