SPX Monitoring purposes; Short SPX 6/26/17 at 2439.07
Monitoring purposes GOLD: Long GDX on 6/22/17 at 22.36
Long Term Trend monitor purposes: Neutral
The top window is the three day average of the Equity Put/Call ratio. The 3 day average of less than .55 have appeared near short term highs in the SPX. Last Thursday the Equity Put/Call ratio closed at .50. Readings less than .55 predict the market will be lower 88% of the time in the next three to five days with an average loss of .8%. On Last Thursday report, we report that there was a possibility the gap on June 20 near 244.50 range would be tested and if tested on lighter volume would imply resistance and today’s rally tested the June 20 gap on lighter volume. The June 20 gap could be tested again-see page two. Short SPX on 6/26/17 at 2439.07.
On last Thursday’s report, we said, “The second window from the bottom is the SPY/VIX ratio. It’s a bullish sign for the market when this ratio is rising as the VIX is falling percentage faster than SPY is percentage rising. VIX leads the SPY in the opposite direction. A strong decline in the VIX produces a strong rally in the SPY and the SPY/VIX ratio helps to identify those instances.” Today the SPY/VIX ratio rallied and suggest there is a possibility the SPX may attempt to rally again and if it does should find resistance near the gap level near 2444 SPX range. Next Tuesday is July 4 and markets are closed. Going into a Holiday the volume usually drops as traders take off early to enjoy the holiday. The SPX could hold in the current range going into July 4 holiday and decline after as the SPY/VIX ratio is showing a bullish short term sign. It still appears the “Three Drives to Top” that started back in early March that has been discussed in our reports is still in play but the current topping pattern could take a few more days to complete.
The bottom window is the Up down Volume percent indicator which made a higher high while GDX made a lower high which is a positive divergence and above “0” and a bullish sign. Next window up is the Advance/Decline percent which has made higher high while GDX made a lower high and another positive divergence and above “0” which is bullish. A bullish divergence is present with the GDX/GLD ratio. GDX has made a lower high today as the GDX/GLD ratio made a higher high suggesting at some point GDX will make a higher high. Normally GDX/GLD ratio leads the way for GDX. The pattern that appears to be forming is a “Triangle pattern” which normally breaks in the direction that preceded it, which is up in this case. Long GDX on 6/22/17 at 22.36.