Stocks rallied a monster 10.4%, exceeding our upper boundary (SPY 273.45) by 2.8% (281.20), on additional Fed emergency cash injections of $2.3 trillion to prop up the coronavirus devastated shutdown economy, as 13.5 million Americans filed for jobless claims the past 2 weeks, the most since 2008. With the Fed’s balance sheet headed north of $7trillion, and the fact they have started buying junk bonds, will make THEM the market, with the implication of Fed action not fully understood by market pundits at this time. Read: Hyper stagflation coming. The New Economy sector which led the bull market, has severely lagged the rally, (16 day lows) when measured against the Old Economy, the largest disparity in over a year, strongly suggest the advance should come to an abrupt end. SPY near term support 262.65. SPY support 253.09. For the intermediate term SPY support 217.36. SPY maximum resistance 292.74.
Gold had a strong week, gaining $64 to 1686. The gold shares (XAU) tacked on 16.4%, closing 98.22, and recorded a 5 week high when measured against bullion. One more pull-back is likely needed, before the next bull phase, which will take the metal to 1800 – 1850 as a first stop. The high energy up-day on Thursday, likely puts off the bottom until April 20/21.The gold shares (XAU) know somethings important will soon happen – having rallied 57% in 19 days. After the gold bottom is in, we’ll be looking for a strong Weekly close over 1704 to launch the market off a large H&S bottom formation to spot 2000. GLD 182.38. Long term targets GDX 45.50, XAU 164.74.
The greenback fell 1.2%, (UUP 26.95) but held above trend support UUP 26.63. A Weekly close under 26.63 turns trends lower. Fib resistance 28.00.