It’s all about liquidity which trumps the technicals — until it doesn’t! Stocks continued their melt-up, gaining another 1.9% to close out the week with all-time highs in both the Old and New Economy sectors. In the last 5 months the Fed has printed money at the fastest pace in history — $414 billion – increasing its balance sheet 11%, to relieve stress in the overnight repo market. With less than 10% of NYSE listed companies, making 52 week highs, the rally is “thin”, and any abrupt slowdown of fresh liquidity, will result in a steep selloff. For now, the party continues, except for brief corrections. SPY Fib support 323.80, 321.97.
Spot gold was driven down $29 to 1533.60 on Tuesday, as all-time highs in “paper gold” open interest on the Comex, was used to contain prices. Persistent physical buying of the metal brought prices back to 1557 to close out the week. The open interest in gold contracts is nearly 10 times the amount of physical gold reportedly held in Comex vaults. It’s 60 times the amount of “registered” gold, designated as available for delivery. A force majeure, (a run on the bank) for physical metal that sends prices explosively higher is coming, at some point. The gold shares (XAU) was down slightly for the week, (101.84) after holding support levels, but lagged the metal. Both GLD and SLV show breakaway gaps that remain unfilled (bullish). Intermediate term targets for GDX 34.58, GDXJ 50.51, SLV 19.22. The 55 week mvg avg for bullion is 1365.01 and has been above the mvg avg for 56 weeks.
The greenback bounced, within the trading range (26.56 – 25.81) challenging the initial breakdown point (UUP 26.30) closing 26.32. Strong Fib resistance 26.53. A Weekly close over 26.67 turns trends back up.