Stock Market
The correction called for last week, started on Wednesday, but was abruptly aborted short of our objectives, on the announcement of an EU agreement, which turns out to be an agreement to draw up a treaty, with more holes in it than Swiss cheese. Our “weight of evidence” is clearly tilted to the bearish side. SPY downside objectives remain 122.43 – 121.29 before another attempt at new highs. The reasons for bearishness: Bearish Weekly Squat formed on smallest range in 5 months; 19 week high in Call/Put ratio; New high Big Block/Volume ratio; Bearish Volume Demand Index which intensified; Bearish Momentum Divergences formed;and Non confirmation in New Economy leadership.
The bright spot: Odd Lot Shorts/Volume remain high which should limit downside.
Gold
The golds treaded water last week with minor losses. The shares fared slightly better than the metal, and are closing in, albeit slowly, on the crossover 13 week moving average, which when accomplished, should result in a dramatic move in gold, led by the shares. Last week we wrote: “…the shares should trade lower with GDX targets 57.20 – 56.19…” Actual low 56.97!! before closing the week 57.98. Expect more sideways before the bull move begins.
Dollar (UUP)
With all the hoopla in the eurozone, the Dollar (UUP) closed the week unchanged. Good support at 21.86. Major Fibonacci Cluster Resistance at 22.65 – 22.83. The Dollar remains in a bear market rally. Minor downside is expected, with continued range trading the likely scenario.
Long yields rose last week despite the EU agreement, after a strong gain on Friday, and appear ready to challenge near-term targets 20.59 – 22.13. Longer term we expect treasuries to get to 2.65%.
Bernie Mitchell
PBSP LLC
480 393 0671
6902 E Pinchot Ave
Scottsdale AZ