Top Advisors Corner

Tim Ord: The Ord Oracle - October 10, 2014

Tim Ord

Tim Ord


Monitoring purposes SPX; Sold 9/30/14 at 1972.29= gain .003%;  Long SPX on 9/25/14 at 1965.99.
Monitoring purposes Gold: Gold ETF GLD long at 173.59 on 9/21/11.
Long Term Trend monitor purposes: Flat


We are Still expecting a bottom to form this week to early next week.  Today’s SPX 40 point decline produce a TRIN close of only 1.53 and in our view not high enough compared to the degree of the decline and suggests market work needs to be done.  Today’s decline also  pushed volume to the highest reading compared to the days previous and most high volume days are at least tested and if tested on lighter volume would produce a bullish sign. Therefore today’s low may be tested again.  Most good signals come from the Friday before option expiration up to Tuesday during option expiration and that window opens tomorrow.  We would like to see panic in the TRIN and TICK higher than the current readings to suggest a bottom is forming in the market.  Still expecting a “Three Drives to Top” is forming here unless SPY trades below August low than we would have to evaluate.  Staying neutral for now.

The above chart looks at the health of the market on a large scale.  This chart dates back to late 2005. The second window down from the top is the NYSE Declining issues/NYSE Advancing issues.   Since July of this year this ratio has been raising showing issues that are in a declining phase is rising.  The current reading today is 1.60 which means there are 1.60 issues declining for one issue rising which in turn shows there are fewer stocks carrying the rally and a bearish condition for the market. The bottom window is the SPY and the window above that is the 100 day moving average of the TRIN.  Major tops have formed when the SPY made higher highs and the 100 day TRIN made higher lows.  The current divergence has been going on since January 2014 and the longest lasting divergence on this chart.  Notice that this type of divergence showed up a the 2007; 2010 and 2011 tops.   The window above is the 100 day TRIN is the 55 day TRIN.  The same rule applies in that it’s a bearish divergence where the SPY makes higher highs and the 55 day TRIN makes higher lows.  The 55 day TRIN also has been showing a negative divergence since January 2014.  We are still expecting another rally to start soon that could touch new highs.  We have other bearish measures that could kick in unless the market shows great strength on the next rally. 

The GLD/XEU ratio may be drawing a bullish Head and Shoulders bottom on a large scale where the Head is the January 2014 low.  To confirm this pattern a “Sign of Strength” is needed through the Neckline (.94 range) which this ratio is moving towards.   If a break above .94 does occur with a “Sign of Strength” it would have a target to near 1.17 level.  If the break does materialize that would be bullish for gold stocks and Gold/$.  Signal is still incomplete as of this writing but looking promising. Still neutral for now.

 

Tim Ord,
Editor

www.ord-oracle.com