Stocks, Gold & Dollar Commentary March 16, 2020

Stocks

No where to run, no where to hide…was the over-riding theme of last weeks market debacle, as a worldwide biological pandemic finally sunk into the public consciousness. Stock markets around the world collapsed in unisom.From a theoretical high and low (based on the Futures) the S&P 500 (SPY) fell 29%, recovering on Friday with a comeback 10% gain. A huge bounceback by the New Economy sector — almost reaching new highs vs the Old Economy — strongly suggest the rally has more room to run. At the markets most dire point —  to stanch the bleeding —  the Fed announced an unprecedented $1.5 trillion lending program, with $500 billion of that to be settled same day, suggesting there is short-term liquidity issues, particularly with Euro bank stocks collapsing. With a triple shock to the economy (Supply, Demand, and Financial), it remains to be seen whether Fed action is enough to mitigate the negative wealth effect society will be experiencing. A short-term cycle high is due March 23/24.SPY Fib resistance 289.95, 301.61 (strong).

Gold

Throwing the baby out with the bathwater was no more apparent than the utter disdain investors felt about the gold stocks, with the XAU beaten down 39% from the high (113.73) just 15 day ago. The “pause” in gold was a bit more than expected, — all compressed in one week — as the metal had a $200 range, (1704 high on Monday to 1504 low on Friday) closing 1530. The big reason: The Dollar spiked 5.5% higher, going from a “flash crash” to unprecedented international demand turning into a frenzy, as markets crashed around the globe. Spot gold support 1500 (strong). Precious metals investors should treat last weeks sell-off as “a gift from god”, as I fully expect these losses to be reversed quickly. Over the next 2-3 weeks, we expect the golds to be range bound, with an important cycle low due the first week in April. Next intermediate term target for spot to be reached during the Summer, 1800 – 1850. Silver suffered twice the decline in percentage terms as gold, falling 24% over 15 sessions with SLV closing 13.69.XAU Fib resistance 91.69, 96.89. GDX Fib resistance 23.01, 25.98.GLD Fib resistance 150.48, 157.57. SLV Fib resistance 15.58, 16.08.

Dollar

The greenbacks volatility was unprecedented. UUP range for the week: 24.64 (flash crash low) – 27.97 (high) Close 27.44 up 5.5% for the week, as the greenback went from pariah to safe haven in 5 days. With Fed money-printing going off the charts, the greenback will be back to pariah soon enough. Weekly close under 26.52 turns trends bearish.

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