Stocks stuck to their recent pattern of gyrating wildly, but maintained trading within the recent range as outlined last week (SPY 243.60 – 240). An important high is due next week (7/12-14). The New Economy sector, as expected, bounced slightly after recording a 9 week low against the Old Economy, staging their biggest comeback on Friday. With the Daily SPY ADX approaching “big move” territory, a break under SPY 239.96 should see a move down to SPY 237.37 where it joins a speedline going back to March 27, 2017. A break of the speedline and 234.48 is maximum downside at this point, resulting in a relatively minor 4% correction from the high.
Friday saw panic selling in paper gold futures, as weak holders bailed, with a low spot print of 1207, on the 2nd highest trading volume in 7 months. A $5 bounce off the lows brought the weekly close to 1212. Gold has likely seen its low (or close to it) and a bounce covering 5-7 days should start right away, with an initial upside target of 1240 spot (GLD 118.09). After the bounce, expect a pullback as gold completes its bottom. As is usual, the shares were pummeled, registering 8 month lows compared to the metal. On the holiday shortened week, the XAU actually completed a Bullish Weekly Squat, so a decent rally is likely with XAU targets 82.03 – 83.39 (strong). After 7 consecutive weeks of spot closing above its 55 week mvg avg. (1239.73) gold closed below it, and now needs to regain this important metric for the bull market to continue. Gold investors need to remember this important message: Gold and silver investors can take comfort from the fact that all manipulations fail in the long run. Whether it’s the“gold corner” of 1869, the “gold pool” of 1968, Kissinger’s secret “gold dump” of the late 1970s, or “Brown’s bottom” (when the U.K. sold most of its gold at 30-year low prices) of 1999, or the more recent gold games on the Comex, all manipulations fail. Gold prices always find their way higher, because paper currencies always lose value over time. Today’s crash represents a gift to investors. We now have a better entry point for what will still be much higher gold prices later this year.
The Dollar bounced slightly off Fib support, but is excruciatingly close to bear market territory (3 consecutive Weekly closes under UUP 24.65).