Fwd: Bernie Mitchell’s Fib Commentary April 16

Stocks traded to SPY Fibonacci Cluster levels (136.36 – 135.00) before rallying sharply on Thursday, then resuming its downward slide Friday. Actual low 135.76!! Last week we wrote: “(the SPY is) within striking distance of… 136.36 – 135.00… where trading rallies can be expected.” A top should arrive 4/17 – 4/18 with SPY reaching 138.61 – 139.35 before turning lower. The correction will reach about 6% (133.27) Enough bearish sentiment has emerged quickly, in the very short term, to prevent a market debacle at this point. Our Call/Put ratio has registered the 2nd lowest low in 17 weeks. When coupled with a 7 week high in Odd Lot Shorts/Volume, the probability is for a range-bound market with an upside bias, after the 6% decline is reached. As we enter the May-November period a deeper correction of the 10 -12% variety is likely, taking SPY to 128 – 125. The key takeaway: The high is in, and it will be much harder to make money on the long side,

Bullion rallied 2% last week – bouncing back from 13 week lows – and continued to gain relative to the mining shares.

However, a Bullish Weekly Squat on GDX, as well as on most of the individual stocks that comprise the XAU, along with an all-important bullish turn in our Volume Demand Index (VDI) suggest the probability the low is in for the miners, and a 5 – 7 week rally is about to start. Faint of heart gold investors need to remember that as the public awakens to the fact that bankrupt governments have created multi trillions in newly created fiat currencies, a tsunami of paper money will become desperate to own gold, frantically bidding up the price in the process. Another factoid worth remembering, stocks — despite the rally — remain 50% below its 2008 high in real money (gold) terms.

The Dollar firmed, after early week weakness, but remained in a tight range. The Dollar remains in a long term bear market that will eventually see new lows. To forecast when the Dollar will take a decisive turn lower, we’ll look for a minimum 22.29 UUP high with a Bearish Weekly Squat over the next few weeks. That should coincide with gold trading over $1700 on the way to new highs.

As stocks caved in, investors rushed to the safe haven of treasuries. How safe can it be based on fiat money debt? But irrational knows no bounds. Eventually, we expect sharply higher interest rates, with TBT reaching 21.96, a 25% increase in rates from the low.