Fwd: Bernie Mitchell’s Fib Commentary March 3

A Monday 1% swoon in stocks was followed by new highs by mid-week, as the market coasted to small gains. Continued weakness in market breadth evidenced by a 3% drop in the Russell 2000 will almost certainly result in the overdue correction we’ve been forecasting. At this point in time, with the New Economy sector continuing to show relative strength, the downside appears limited to SPY Fibonacci Cluster Support 131.32 (a 5% decline), and then back up to challenge –and possibly exceed — new highs.

The gold low forecast to arrive around February 21, came a week later with Comex gold printing $1686 in Extended Hours Trading. (Day session low $1696). On February 13 we wrote: “…paper gold (GLD) should print 164 – 162, and spot gold 1700 – 1690.” Actual low GLD 164!! As we wrote last week: “Bulls should not be frustrated by this pullback, (although many arebased on the comments I’ve read), GLD is expected to eventually exceed 200, surpassing the old high (185.85), taking spot gold to $2054.” We believe the miners will lead the next gold rally. While the Dollar recorded a 6 week high vs the metal , the miners showed relative strength, registering a 4 week high against the metal.

Last week we wrote: “The Dollar (UUP) (should) regain its footing around current levels, and bounce into resistance (22.13 – 22.23) over the next 2 weeks.” Actual high 22.14!! The Dollar (UUP) continues to chop in its bear market rally. Next important Fibonacci Cluster Resistance 22.33. To break the bear market stranglehold will require 3 consecutive Weekly closes over 22.89.

Long Treasury rates closed the week unchanged after early weakness. Investing in long Treasuries, after an 18 year bull market, with yields below 2%, may turn out to be the biggest bubble ever, as investors of all stripes, fail to understand interest rate risk. At some point, (we dont know exactly when) there will be a huge 50% rise in yields, with TBT soaring to Fibonacci Cluster Resistance 27.31.