The Right Way To Trade

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Stocks, Gold & Dollar Commentary January 13, 2020

Stocks
Stocks continued their relentless “melt-up”, as the Fed continued to pump liquidity for RP operations totaling $258.9* billion,¬†tacking on 1.7% for the week, led by the New Economy sector vs the Old Economy, which recorded new all-time highs 5 consecutive days last week. However, “under the hood”, volume was the lightest in 7 weeks (excl holiday weeks), resulting in Upside/Downside volume turning bearish. NYSE 52 week lows was the highest in 6 weeks, highlighting the markets weakening Breadth. Momentum is starting to turn, with the strongest Daily momentum now 5 weeks old.¬†Stocks are severely overbought and a correction is imminent. Initial SPY support 321.88 followed by 317.30 (unsat SPY level).
*Curvature Securities
Gold
As news of the Iranian missile attack in Irag hit the wires, spot gold spiked overnight to 1610. As hostilities eased, the metal fell the next day to 1539.50. Gold reclaimed support 1552 – 1557, closing Friday 1562.30, up nearly $10 for the week. The gold shares (XAU) surrendered leadership, falling 3% (102.25), but bounced off support levels, with an up-close Friday to close out the week. GLD near term resistance 147.42. GDX resistance 29.26. GDXJ resistance 42.232. SIL resistance 32.81. SLV resistance 17.76.
Dollar
After almost reaching important support UUP 25.81 (actual low 25.93), the greenback bounced to the initial breakdown level (26.30), settling 26.22 . More range-bound action is likely, bound by 26.56 and 25.81. A Weekly close over 26.70 turns trends back up.

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