A severe (1%) mid-week drop in stocks, was abruptly aborted as a flood of “good news” supported the continuing rally to new highs, with the New Economy stocks exploding on Friday, behind the headline of 3% GDP growth in the economy. All this behind continuing deterioration in Upside/Downside volume, and a surprising 9 week high in 52 week lows. A cycle high is due on Monday, so we expect a modest pullback, as the market goes through another one of its small corrections. SPY Fib support 249.45, 247.21 (strong).
We were early on our call for a gold rally, as interest in the PM’s disappeared with good economic and political news (tax cuts) dominating the news. However, for the 2nd consecutive week, Upside/Downside volume on the XAU gold stocks was bullish, along with a Bullish Weekly Squat, on a 7 week high in volume, signifying capitulation by week holders. The metal ended the week 1273, still above its 55 week mvg avg 1251.73.
With the Euro taking up the largest percentage of the Dollar Index, the Draghi announcement of virtual unending QE, sparked a Dollar rally, catapulting the UUP to 24.67, and the first Weekly close over 24.58. Two more weekly closes over 24.58 will turn the Dollar bullish.