Stocks, Gold & Dollar Commentary April 6, 2020

Stocks

Stocks had a volatile week –rallying at the outset — declining by weeks-end, with the net result less than a 1% decline, with SPY closing 248.19. Important SPY support 234.93. Long term SPY support 210 – 212. SPY resistance 273.45. A bleak jobs report came as expected with a loss of 701K jobs in March, with the unemployment rate shooting up to 4.4%. Despite the unprecedented passage of the CARES act, GDP will collapse in the months ahead, but the stock market’s 33% decline thus far, has largely discounted the GDP collapse, and will be supported by the amount of government goodies being thrown at the economy. This bear market is somewhat unique in that it is both Structural (financial bubble) and Event-Driven (coronavirus pandemic) and will require many years to play out (no new highs).¬†We expect over the next 3 months stocks to be range-bound, with 273.45 on the high end, and 217.36 on the low end.

Gold

The gold market has experienced unprecedented volatility in recent weeks (XAU range 113.73 high, 62.72 low, Friday close 84.36 – Spot Gold 1704 high, 1446 low, Friday close 1622) as investors bailed out to raise cash, for the most part to meet margin calls on stock holdings. That stress liquidation is now history. It’s important to note that there is developing a critical shortage in physical gold, as the global pandemic has caused a shut-down by the 3 largest refiners in the world in the Canton of Ticino in Switzerland.*This event should cause the physical market to separate from the fraudulent paper market. An important low is due this week (April 8-10), and then the next bull phase is set to begin, with a spot gold target 1800 – 1850.*Matterhorn Capital Mgmt Fib resistance levels: GLD 157.81, GDX 28.00, GDXJ 37.67, SLV 15.35, GOAU 15.65, XAU res 93.75. Long term targets: GDX 45.50, GLD 182.38, XAU 164.74.

Dollar

The greenback held important trend support (UUP 26.61) Actual low 26.67. Then, bounced 2%, (UUP 27.29).Fib resistance 28.00. A Weekly close under 26.61 turns trends lower.

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