With investor complacency literally off the charts (the VIX coming off a 20 year low) stocks did what it’s supposed to do: rally into the Thanksgiving Day holiday, (up 1.4%) then giving up some in Friday’s shortened session. (SPY close 314.31 new closing high). Helped by “the gift that keeps on giving”, (leaks that a US/China trade deal is getting close), the New Economy stocks regained momentum, but failed to exceed the all time high vs the Old Economy. Close, but no cigar! While our technicals continue to flash bearish signals, they can’t compete (at this point) to the more than $250 billion in fresh liquidity that’s been added to the Fed’s balance sheet, and found its way into greasing the upward spiral of stocks. With an important cycle high around December 4, a correction of some significance is way over due. SPY Fib support 310.40. Strong support 303.88.
In subdued, pre-holiday trading, spot gold was sold to a 10 day low (1449.80) on Tuesday, then reversed course on Friday to close higher on the week (1464.50), but the real takeaway for the precious metals was the vast out-performance by the miners — particularly the juniors in both gold and silver — gaining around 4% for the week, and a yearly high when measured vs the metal. Weekly closes for the following will constitute breakouts: GDX 27.84; GDXJ 38.60; SIL 30.42; GLD 140.60; SLV 16.50. Gold’s price objective between now and end of the first quarter 2020 is 1670. However, we expect silver to lead rally, as open interest in silver futures has grown to over 224,000 to keep prices in check. Shorts will start to cover, as prices rise, with a price objective of 26.59, as the gold silver ratio drops to the mid 60′s next year.
The greenback ran into overhead resistance near UUP 27.00 (actual high 26.98), closing 26.91 unchanged for the week. A weekly close under 26.70 will turn Dollar trends bearish, looking for 26.30 and eventually 25.81.