Yesterday, we said "Today marks a fourth day down; 19 of the last 21 higher within 5 days. Pattern forming could be an ABC where "C" is equal to "A" would give target near 3180 SPX. Resistance lies near 3325, the previous low. Need to see panic in TICK and TRIN to form next low." SPX is near resistance and volume did drop today, showing that the resistance may hold. The 3-day TRIN is back up to 1.34 and where bottoms can form. So far, we have not see TICKs reach below -300 to suggest a bottom is in. Yesterday's low could be tested to produce a bullish setup of TICKs that do reach panic levels. If the market holds here or higher going into November 3, then the current president will hold onto office; if the market is much lower than current price, then a new president is predicted.
Yesterday's market action produced a "Major Distribution Day" (down volume is 9X up volume). This is a form of panic in the market and is usually formed near lows (the February/March decline it didn't seem to matter). Yesterday's low on the SPY had relative high volume and most high-volume lows are tested. This week is the weakest week of the year and would likely see that yesterday's low can be tested. If test does come and the TICK and TRIN do reach extremes, it could produce a bullish short term signal. The next 30 days could produce a choppy market going into the Election timeframe on November 3.
Above is an intermediate-term view for the XAU (GDX) going back to 1984. Momentum rules everything. The bottom window is the monthly Slow Stochastic for the XAU/Gold ratio (a momentum indicator). When the monthly Slow Stochastic reaches above 85 (current at 87.55), it's late in the game for the current uptrend. Slow Stochastic needs to turn down to suggest the final high has been seen; it has not turned down. To turn down, the Slow stochastic the monthly XAU/GOLD ratio would need to go sideways or turn down. Silver is entering its weakest quarter, which starts now and runs into late December. Silver has a percentage of being higher in this time frame of only 32%; this also goes for gold. As we write this, momentum has not turned down; it just reached an extended level. Our trading plan for GDX has not turned to more short-term trades that may last a week or two. A possible setup could form on a test of the "Selling Climax" low of 8/11.
Tim Ord,
Editor
www.ord-oracle.com. New Book release "The Secret Science of Price and Volume" by Timothy Ord, buy at www.Amazon.com.
