Below is the link to the weekend Briefing. For weeks I have been pointing out how the structure of the Stock Indices was not confirming price. Last weekend, I posted a Blog titled Stocks Post a Series of Lower Highs. In that post and the accompanying Briefing, I outlined how the trend is Stocks had changed to a downtrend and to expect lower prices and at least a test of 2030 in the S&Ps.
The thrust lower at the end of the week was accomplished on extremely strong internals. The only information from the Indices there may be an impending pause was the divergence in Breadth from the NASDAQ and the extreme oversold condition of the Indices. Both of these warn of the possibility of some type of rotation up to work off the oversold condition. A lower low is possible on Monday but, if the internals are diverging from Friday’s low, that would suggest the impending rotation to work off the oversold condition.
As I outlined in Thursday’s Briefing, 1970 in the S&P was the next level of support. The S&P traded right to that before time ran out and trading ended. Trading much below and closing below 1970 will increase the probability of a test of the October low in the 1800 area. As long as the S&P holds below 2030, I fully expect the 1800 area to be tested. Keep in mind, markets rarely move in straight lines. Typically, there is a run, a pause, a run and a pause. Also, after extreme price moves similar to the last two days of trading, there can be a sharp move in the opposite direction. This does not change the trend and typically draws inexperienced investors in thinking a low has been reached.
Silver needs to confirm the move higher in Gold. If it does not do that soon, I will become skeptical of the attempted rally in the Gold market. Silver must confirm the move.