Stocks, Gold & Dollar Commentary July 29, 2019

Stocks

With last weeks resurrection of the New Economy sector into new high ground, a severe market downturn is off the table — for now! However, our bearish outlook remains intact with the Transports still 7.5% off the highs. More likely from these all-time high levels, is a “garden variety” correction in the 4%-6% range, (taking back a chunk of the 14% rally over the past 8 weeks) which would take SPY to solid Fib support in the 290 – 284 levels. From there another test of the highs. This would take the market into the October time frame, where stocks again become vulnerable, as the New Economy sector breaks down. The Bearish Momentum set-up has been completed with last weeks rally, Upside/Downside volume and Market Breadth remain solidly bearish, with the lightest volume in nearly a year. A Weekly close under 289.53 turn our 89 line trends bearish.

Gold

To prevent a spike in gold over 1435, the banking cartel threw a voluminous amount of paper at the market on Thursday, driving spot from 1433.80 to 1411 and back to 1425 before closing 1418.30, down $7 on the week. The shares, following the metal, ran into Fib resistance (GDX 28.36) before falling back to settle 27.28. GDX Fib resistance 30.70. GDX Fib support 25.97. GLD Fib resistance 143. GLD Fib support 132.87.Looking at the shares longer term, using a monthly chart, the XAU shows a May breakout over a 3 1/2 year period from a Monthly Bullish Falling Wedge formation, projected to 113 this year, and 198 over 2-3 years. Turning our attention to the least loved and most manipulated precious metal, silver has started to wake up from a multi-year slumber. The gold/silver ratio has dropped from 92 to 86.5 the past several weeks. With our gold projection of 1670 this year, and a gold/silver ratio falling in the intermediate term to 60, silver would be projected to trade to 27.83. SLV Fib res 15.73. SLV Fib support 14.56. 

Dollar

New high ground as the world scrambles for the Dollar (UUP 26.58). Weekly close under 26.14 to turn tends lower. 25.75 for support

Stocks, Gold & Dollar Commentary July 22, 2019

Stocks

Stocks declined 1.3% last week, finding SPY support 296.50 (actual low 296.70), bounced to 300.00, before closing near the lows. Friday’s action generated the worst bearish momentum in 7 weeks, and have finally completed the Bearish Momentum set-up we were looking for, and are now ready to go down. A final rally into a high day around July 31 is expected, as the Fed cuts interest rates. SPY Fib resistance 301.25. SPY Fib support 295.64, 294.82. A Weekly close under 288.26 turns our 89 line trends lower.

Gold

It was a wild week for the precious metal, with a $54 range (1399.50 – 1453) settling 1425. The gold shares continued to lead the group, gaining nearly 7.0%, and multi-year highs when compared to the metal. The cartel was determined to not let gold close over 1435, as that would have likely attracted managed money, and prompted a parabolic rise. However, the “genie” is out of the box, and after some corrective action, 1670 is in sight. (Target from H&S bottom formation). The fundamentals to hold gold for the very long term has never been brighter, as 40% of global debt yield negative returns, with U.S. debt heading there as well, in a low growth stagflation economy. Silver actually rose from slumber, and out-performed gold, rising 9.0%, with spot touching 16.55, and SLV 15.54, approaching Fib target 15.73. SLV Fib support 14.56, spot 15.51. GDX Fib resistance 28.36, 30.70.

Dollar

A volatile week for the greenback, as it held Fib support UUP 26.10, settling 26.29. Look for Weekly close under 26.10 to turn trends lower and 25.72 for support.

Stocks, Gold & Dollar Commentary July 15, 2019

Stocks

For the shorts, it was torture by a thousand cuts, as stocks eked out gains 4 days in a row — after a sharp down Monday — but in the end managed less than a 1% gain, on the lightest volume in 12 weeks. Stroked by Fed Chair Powell after 2 days before Congress, who left no doubt that the Fed was going to save the economy with an interest rate cut in July. With the incremental gains last week, the final set-up for Bearish Momentum has now been delayed to around July 24. The Transports lag badly, and are still 8.5% off the highs. The New Economy sector is now in overbought territory when compared to the Old Economy, and has still not gone to new highs. Market Breadth is weak with only 3% of stocks on NYSE registering new 52 week highs. The initial sell-off should find Fib support at SPY 296.50 for a bounce.

Gold

Another volatile week for the precious metal — which found solid physical buying throughout the week at support levels — ranged from 1386 to 1426.50, settling 1415. What we’re seeing is normal price action after the recent breakout above 1360. The potential exists for a parabolic move to 1670 during the Summer, triggered by an ultra dovish Fed. GLD Weekly Fib Resistance 143,00 153.15, 167.60. The gold shares (XAU) continue to outperform the metal, registering 48 week highs. Silver has lagged badly, controlled by paper short sellers, who sell just enough every day to contain prices. At some point, every ounce will be taken and the algos will lose control.  Near term Fib resistance SLV 14.74.

Dollar

We were one week early on a Dollar (UUP) reversal. Look for Weekly close close under UUP 26.11 to turn trends lower and Fib target 25.72 for support.