After a gap-down lower opening on Monday, which set the SPY low at 273.09, (and the New Economy sector setting 4 month lows) – not quite reaching Fib Support SPY 271.01 – stocks embarked on a spectacular 4 day rally, gaining back 5.5%, on rumors the Fed will soon reverse course and start lowering interest rates. With the rally achieving a 4 month high in Bullish Momentum, and a noticeable improvement the Market Breadth, stocks now need a few weeks of sideways trading for the bullish momentum to wear off, before the next sustained down-move can begin. Major Fib resistance 290.27. A trading top is due June 12. SPY Fib support 279.11.
Spot gold rallied $36, settling 1340.70, its highest price in over a year. GLD printed 127.25 matching spot. Unless the market can accelerate from this level to close over spot 1360, expect a decent pull-back to fill-out the neckline in an enormous H&S bottom formation, with a low around June 25. A strong Weekly close over GLD 127.25 projects to 134.96. GLD Fib support 123.85 (strong). The gold shares resumed leadership over the metal, recording a 6 week high, despite bullion strength. Without a strong gold close over 1360, the shares should range-trade over the next 2 1/2 weeks, with a low due around June 25. GDX Fib support 22.14, 21.86 (strong). Our scenario for a strong PM breakout over the Summer is playing out. SLV broke the bullish falling wedge formation with 14.20 print running into resistance and not able to clear. A strong close over 14.22 turn trends bullish. SLV Fib resistance 14.74, 15.69 (strong). This may seem unrelated to reality today, but for very long term traders take note: When “gold fever” hits, an XAU QUARTERLY close over 106.35 will set the stage for a move to all-time highs 232.72. Fib resistance 164.80 (strong).
With talk of a fairly imminent cut in rates, the greenback took it on the chin, falling into Fib support UUP 26.00 before settling 26.04. A strong close under 25.94 will turn trends bearish.