Stocks were up 4 out of 5 days, tacking on another 1.5% — recording new all-time highs — led by the New Economy sector. All with “a little help from my friends” , to the tune of $634 billion Fed money, in the last 4 months, (part of the monthly $60B “Not QE”) as emergency funding to prevent crashing the systemically important repo market. This run-up in the market has turned our technicals to neutral. Zoltan Pozsar, formerly with the NY Fed and the US Treasury, by year-end, warned that as a result of collapsing systemic liquidity and a drought of (bank) excess reserves, the market could see a seizure of the FX swap markets, which could send the US Dollar and bond yields soaring and a stock market collapse. Way above my pay grade, so we’ll stay with a maximum correction in the 3 -5% range, and then another thrust to new highs. SPY support 312.01, 309.67.
Gold had a quiet week with only a $12.50 range, closing Friday 1478.90, up $2.70. The metal has been consolidating for nearly 4 months, which contains a series of lower highs, and higher lows, since gold reached this year’s spot high on September 4 of $1557.70, creating a bullish flag formation. With the trend positive, GLD needs a Weekly close over 140.55 for a strong break to the upside. After closing at a multi-year high last week, the shares surrendered leadership, falling to a 3 week, low vs the metal. A Bearish Weekly Squat formed, so expect some downside. GDX Fib support 26.61. It should be silvers time to shine, breaking above an enormous bullish falling wedge, and above our exponential 89 line. A strong Weekly close over SLV 16.37, should start a move to Fib resistance 17.76, after clearing 16.68. Every precious metals investor needs to remember the fraudulent pricing mechanism on the Comex, (where there’s virtually no metal for delivery) where the real control of Gold and Silver pricing is the paper Open Interest, now standing at 209,101 for silver and 730,040 for gold, an all-time record high.
The greenback confounded us by staging an umpteenth bounce, gaining half of 1%, closing UUP 26.80. Strong resistance 26.88. A third time under our 89 lines (26.79 – 26.71) should be good to start ball rolling to downside, UUP 26.30, 25.81.