Top Advisors Corner

The Ord Oracle October 20, 2020

Tim Ord

Tim Ord


The second window down from the top is the 5 RSI, which is a momentum indicator. Momentum rules everything, and the 5-period RSI is below "0", suggesting momentum is weak. The bottom window is the VIX, which closed at a new short term low, suggesting that SPY may hit a new short term low soon as the VIX leads the SPY in the opposite direction. There is an open gap near the 337 SPY range, which could be a downside target. The next couple of weeks could be challenging as markets do not like the unknown as to who will be president. Unless there is extreme readings in the TICK and TRIN to show a high degree of panic (where the market has determined who will be the next president), the market may swing both up and down. Staying neutral for now.

This is another chart that shows a large decline in the SPX is unlikely. The second window down from the top is the NYSE McClellan summation index. A large decline can occur when this indicator falls below "0" (noted with blue vertical lines). The current reading is +363 as of yesterday's close. With the bullish "10 day 2/1 breadth Thrust" recently (yesterday's report), the market needs to weaken first before a larger decline can form.

Above is the weekly GDX/GLD ratio with its RSI in the top window. Intermediate-term bullish signals are triggered when the weekly RSI for the GDX/GLD ratio falls below 30. The blue vertical lines on the chart show these signals where triggered. Another useful part of this chart is that, when the weekly RSI of the GDX/GLD ratio stays above the 50 level, the market is considered in an uptrend; the current reading is 55.73. The pink-shaded areas are when the weekly RSI is below 50. So far, the weekly RSI has remained above 50 since the March low. Over the next two weeks (the election being November 3) the gold market may become quiet. The daily signals are about split between buy and sell on today's close, which is neutral. Markets that decline into elections usually rally after (give or take) five days out. Long GDX on 10/9/20 at 40.78.

Tim Ord,

Editor

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