Stock Market

Last weeks call for “…a higher market over the next few weeks” exceeded expectations, as the General Market (OEX) ran non-stop to a 10 week high (554.65). The gain: 13.5% in 9 days. The likely scenario in the coming week is a modest pullback, with SPY targets 119.86, 117.68 to a maximum 116.41, before another assault on new recovery highs. Despite the huge gain, volume was at a 12 week low, at the same time Big Block/Volume recorded a 13 week high. Institutions were selling into the rally. The last time the ratio got this high was in July, when the market went into a quick tailspin, dropping 4% in 10 days. Expect something similar. The all-important follow-up rally will determine the markets staying power.
Gold

Last week we wrote: “(Gold) stocks are poised to tack on additional gains…”. The gains came to 15.5% in 9 sessions (XAU 171.27 to 197.87). The shares have become highly correlated with stock prices, and largely influenced by the direction of the Dollar. With a pullback in stocks likely, a correction in the gold stocks is also likely. GDX targets are 56.66, 56.31. Near term price targets were reached in the gold stock indexes. Next price objectives GDX 58.93, 60.85, XAU 203.06. The shares have outperformed the metal for 4 weeks running, but still have a long way to go, before its relative performance vs the metal is in an uptrend. When that happens, the shares will be ready for explosive gains.

Dollar (UUP)

Last week we wrote: “… expect the UUP to retrace its recent gains to Fibonacci Cluster Support (21.72) which will coincide with a stock and gold stock rally.” After a quick drop to 21.72, a spike to 21.88 was followed by a closing low of 21.64. A bullish Daily Squat formed on the fast 89 line projecting a good bounce from these levels. This should pressure stocks and gold. Good Fibonacci Cluster Support comes in at 21.48.

Interest Rates (TBT)

Last week we wrote: “Treasuries should follow stocks higher.” Based on TBT, Treasuries rallied 8% last week, closing at 21.62. Ultimately, Treasuries should trade to 2.65%. Fibonacci Cluster Resistance for TBT is 26.04. As that level is approached we’ll sell 60/90 day at-the-money covered calls.

You can learn our Fibonacci Impulse Strategies trading method at no cost. Our training videos take about 2 hours to complete. If interested send email to pbsp@feargreed.com Att: Paul Mitchell

Bernie Mitchell

PBSP LLC

www.feargreed.com

480 393 0671

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