SPX Monitoring purposes; Long SPX on 10/22/18 at 2755.88.
Monitoring purposes GOLD: sold 11/27/18 at 18.88=gain .075%; Long GDX at 18.72 on 8/17/18
Long Term Trend SPX monitor purposes; Long SPX on 10-19-18 at 2767.78
Seasonality is bullish into Thursday (Santa Claus rally). The above chart is “The American Association of Individual Investors Bull Bear ratio.” The chart above goes back 9 years and shows the times when the 3-period moving average of this ratio fell below .75 (current reading is .59). This ratio suggests an intermediate-term low is forming here. At some point the December 24 low (2350 SPX) may be tested, but a 50% retracement of the down move, which is near the 2630 SPX range, may come first. We have been long from the 2750 range and may sell if and when we get to the 2630 range, possibly entering a short position for a test of the low. The first half of 2019 could see lots of volatility. Have a happy New Year.
The middle window is the “3 day average of the Tick/TRIN ratio.” This chart goes back five years and shows the times when this ratio reached >700. In most cases when the Tick/TRIN ratio reached +700, it was the beginning of a strong rally, especially when after a significant decline (like we have now). To get the Tick/TRIN ratio >700, one would need +700 Tick close with a TRIN close to 1.00 three days in a row, a +350 tick close with a TRIN of 2.00 three days in a row, or a combination of both. In general, the TRIN would need to be above 1.50 and the Ticks above +500 to get these +700 readings - and we have had that. Will the market continue to its 50% retracement level of the 2630 range or will it pull back to make a double bottom before heading higher? Hopefully that will be answered when more evidence comes in. Either way, the market appears heading higher in the intermediate-term.
The top window is the weekly RSI for the Inflation/Deflation ratio. When the RSI >50, a bullish up move is under way; when below 50, a bearish move is in progress. The current reading is 43.72. The Inflation/Deflation ratio normally marches in step to XAU and when there is a difference between the two, the ratio usually has the correct move. The weekly XAU moved down into a September low breaking below the 2017 low; however, the Inflation/Deflation ratio matched in its 2017 low and has been holding steady since, giving a longer-term bullish sign. Looking over the short-term since the October high, the XAU matched its October high and the Inflation/Deflation ratio made a much lower high, suggesting short-term weakness. A possible pullback may materialize short-term for the XAU (GDX). The next intermediate up-move may begin early 2019. The ideal time for a gold stock bottom is January 22, 2019. Not sure if the pull back will test the September low, but it could. We will wait for the next bullish setup.