Monitoring purposes SPX: covered SPX short on 2/11/16 at 1829.08, gain 1.31%; Short SPX on 2/8/16 at 1853.44.
Monitoring purposes GOLD: Neutral
Long Term Trend monitor purposes: Short SPX on 1/13/16 at 1890.28
This is option expiration week which usually has a bullish bias and very true this expiration week. The bottom window in the above chart is the McClellan Oscillator. It has been a bearish short term condition for the market when the McClellan Oscillator turns down near the +200 range. We pointed these condition out with blue arrows the McClellan Oscillator turned down before reaching +200. Today’s close came in at +194.09 and for the market to show weakness, tomorrows readings should below +200, which in turn suggests market may be flat to down. We noticed that the 2/11 low was higher than the 1/20 low and this condition shows up a lot in a “Three Drives to Top” pattern. Though tomorrows trading may not be up it does suggests the final short term high may have not been seen. There is a possibility that market may push higher into the 198 range on SPY where McClellan Oscillator does not trade much above +200 creating a “Three Drive to Top”. The “Three Drives to Top” have a downside target to where pattern began and on this example a target to 180 range is possible. Don’t see a safe trade here.
Above is a longer term view of the market. Back at the 2000 top the TRIN/SPY ratio made a double low where the second low was higher than the first low and where one year apart and the decline lasted two years. The top in 2007 say the SPY/TRIN ratio had its double bottom six months apart and the bear lasted year year. The current double bottom in the TRIN/SPY ratio had its double bottom six months apart also and suggest the bear could last one year which would give a bottom date this coming December. The sample size is very small but is food for thought. When the actually bottom does come the TRIN/SPY ratio will be giving bullish signs and turning back down, so we won’t be missing the bottom. For now we remain short for long term and neutral for short term. We covered our short SPX position on 2/11/16 for a 1.31% gain.
The Gold Commercials came in at -104,923 as of 2/12/16; previous week reading was -77,355. COT commercial readings below --50K are bullish and readings above -150K are bearish. Above is a short term view of what may be unfolding for GDX. The retracement off of the second top came in at 61.8% which is what one wants in helping to identify a “Three Drive to Top” pattern. Market needs to find its footing here and push to another new short term high to complete the “Third top” and volume needs to be less than the second top. The GDX/GLD ratio in the bottom window ideally would show a divergence also. The COT commercials come out on Friday’s and if they push there short position to near 150K would help the cause for a short sale on GDX. A lot to ask for but lets see what happens.
Tim Ord,
Editor
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