SPX Monitoring Purposes: Long SPX on 10/22/18 at 2755.88.
Monitoring Purposes GOLD: Long GDX at 18.72 on 8/17/18
Long Term Trend SPX Monitor Purposes: Long SPX on 10-19-18 at 2767.78
Today’s SPY rally tested the high of three days ago on lighter volume, suggesting resistance. There is a gap below that was tested three days ago on higher volume, which suggests that gap could be tested again which comes in the 270 range. Not sure if the market will pull back and test the gap, but if it does we expect the gap to hold and reverse back to up. There is evidence that market may at least test the October highs before the year is out. We remain bullish short term and long term (other than a pull back to test 270 SPY gap).
Above chart is a longer term bullish sign for the SPX. A bullish longer term sign is generated when the McClellan Oscillator falls below -250, then turns back up and travels at least +350 points. This condition suggests initiation of a rally phase in the coming weeks. There can be a test of the recent low in a worst case scenario, but in general the market should work higher. Also worth noting is that during midterm election years the bottom forms in late October (this one bottomed on October 29) and generally move higher into year end with an average gain of 11%. The 11% gain would take the SPX back to the October highs.
Above is a longer term view for GDX. The bottom window is the weekly Cumulative Up Down Volume indicator and above that is the weekly Cumulative Advance/Decline indicator. If you look at the blue box in the middle of the chart dating around mid 2015 to early 2016, GDX was in a small trading pattern generally working lower. Notice that both Cumulative Up Down volume and Cumulative Advance/Decline were making higher highs and higher lows, producing a positive divergence. What came next was a huge rally in GDX that more than doubled in six months. Starting in early 2018, GDX has been making lower highs and lower lows, but both Cumulative Up Down volume and Cumulative Advance/Decline have been making higher highs and higher lows similar to what happen in mid 2015 to early 2016. We only have data going back to 2010, which is a shortfall of this study. Sentiment did have a washout in August suggesting a two year rally phase. We will hold our long position for now. Long GDX at 18.72 on 8/17/18.