Stocks rallied 2.8% last week, gapping over our 89 line trendlines, on Thursday, turning them bullish — on Trumps tweet that China wants to make a deal — but its not likely to last. With SPY printing 294.24 on the open on Friday, and churning without making further ground, a bearish “3 drives to a top” formation formed (294.15 8/13, 293.93 8/22, 294.24 8/30). Lagging market Breadth, bearish Momentum divergences, Upside/Downside Volume and failing New Economy leadership, point to continued choppy trading bound by the markets recent range (295 – 281) until the resolution to the downside, after several more weeks, as the market fills out the right shoulder of a bearish H&S topping formation. The battle will continue to wage around our 89 lines, until finally resolved to the downside. A Weekly close under 290 will turn trends bearish again. Maximum decline envisioned at this point in time 9% – 12%, with SPY Fib support 275.66 – 266.09.
The precious metal made its high on Monday (1554), had wide chopping ranges every day, before finally closing near the low for the week (1516.40) settling 1520. The top on the shares (XAU Index) came on Wednesday at 102.29, finally cracking the century mark on a 3 year high. Our projected high for spot (1670) was not reached on this bull move, which started on July 1 at spot 1382, and will now have to wait until the correction runs its course through September, likely 3 – 5 weeks. GLD Fib support 137.77, GDX Fib support 27.00, SLV Fib support 16.00. The gold/silver ratio has dropped to 83 from 92 in about a month, on the way to 60 on the next run-up in the metals. GLD Monthly Fib resistance 153.15. GDX Monthly Fib resistance 33.63, 46.37. SLV Monthly Fib resistance 26.19, 34.63.
A surprise, mad scramble for Dollars pushed the greenback to new multi-year highs, with UUP touching 26.92, totally reversing the “reversal down day” the prior week. It will now take a Weekly close under UUP 26.35 to turn dollar trends lower. UUP Fib support 26.48.