The ORD Oracle, Feb. 27, 2017

  • SPX Monitoring purposes;  Covered short SPX 1/31/17 at 2278.87 =.09% gain; Short on 1/30/17 at 2280.90
  • Monitoring purposes GOLD: Sold GDX at 24.33 on 2/22/07 = gain 20.15%; Long GDX on 12/28/16 at 20.25.
  • Long Term Trend monitor purposes:  Short SPX on 1/13/16 at 1890.28

The above chart is an hour chart for the SPY and top window is the 15 period moving average of the tick.  As long as the15 period moving average of the tick stays above “0” we have to say the short term trend for the SPY is up.  Need to see readings below “0” on the tick chart to show selling are interring the market and so far that has not happen.  The bottom window is the hourly VIX.  The hourly VIX has been making higher lows while SPY has been making higher highs and a bearish combination suggesting SPY rally is near an end.  We will keep our powder dry for now.

The top window is the 5 day average of the Total put/call ratio (CPC) and readings below.90 have appeared near market highs.  The last several days the CPC 5 day average came in well below .90 and it appears market is starting to stall the market rally.  We are expecting at some point that NYA will pull back to support near 11300 (2300 on SPX) before heading higher again.  This churning by the NYA over the last week has produced bearish candlestick pattern called a “Doji” (not shown).  The weekly RSI reached near 75 on the SPX.  Going back to 2010 when the RSI reached near 75 and higher, the market stalled four of the last five times and two of them produced near a 10% correction and the other two where around 2%.  The current development, if it plays out would appear to be near a 3% correction.  Normally when the weekly RSI gets this high, it takes a while for a top to develop, so market could stay in the current range another week or two.  After this potential pull back materializes market is expected to go on and make new highs again.

The top window is the RSI of the GDX/GLD ratio.  Bullish signals for GDX are generated when the RSI of the GDX/GLD ratio closes above 50 and bearish signals when it falls below 50.  February 22 the RSI fell below 50 and we went back to the sideways on GDX.  The RSI has now reached the oversold level below 30 and suggests the decline is getting overdone to the downside.  On previous reports we had a downside target on GDX near 22.50 range and market is nearing that range.  We noticed today that GDX had a spike in volume and could represent exhaustion suggesting most of the decline is done.  We will be looking for a bullish setup on GDX in the 22.50 to 22.00 range in the coming days. Timer Digest has us ranked #2 in performance over the last 12 months.  Sold GDX at 24.33 on 2/22/17 = gain 20.15%; Long GDX on 12/28/16 at 20.25.