A mid-week 2% rally, with the high day coming in on December 12, was followed by a sharp decline to the lowest SPY closing low (260.57) in 8 months. A bullish Weekly Squat was generated on the smallest Weekly Range in 5 weeks, with a 6 week high in the New Economy sector vs the Old Economy, along with the necessity to work off the previous Bullish Momentum, point to a 2-3% bounce off the lows, with another high day during Christmas week. SPY Fib resistance 272.35 – 276.33 (strong). After the bounce runs its course – with our Upside/Downside Volume studies deteriorating badly - we expect stocks to break sharply to the downside, after having filled out the enormous H&S topping formation. It’s worth noting, at the present time, 52% of global markets are now down over 20% from their highs and qualify as bear markets. The US is about to play catch-up!
Gold fell $8 on the week, settling spot 1238.50, after running into a “brick wall” at 1250 on Cartel paper selling and new highs on the Dollar. GLD near term Fib resistance 118.79. GLD Fib resistance 122.44 (strong).
The XAU fell slightly, but a Bearish Weekly Squat was generated, pointing to a modest selloff, with Fib support 66.32 – 65.23. We expect the PM’s to trade range-bound until the end of year. All signs point to 2019 as the
break-out year, as the global economy goes into stall mode. All Central banks will be desperate to jump-start their economies with another round of rate-cutting and QE, and sovereign debt purchasing.
Yearly highs on the Dollar, (UUP 26.12) finally clearing strong Fib resistance (UUP 26.04). We expect a weak Dollar in 2019.