- Monitoring purposes SPX: neutral.
- Monitoring purposes Gold: Neutral
- Long-Term Trend monitor purposes: Short SPX on 1/13/16 at 1890.28
Above chart is the Volume Momentum Oscillator for the NYSE. This chart goes back in mid 2008. Short-term consolidation have occurred when the Volume Momentum Oscillator reached +175 or higher. It has reached this level six time (counting this time) and the previous five times the market stalled. Therefore will be looking for evidence for a short term-top once the SPY hits a new high (at least we think the market will touch a new high).
We showed this chart yesterday and its updated to today’s close. This week is option expiration week which usually has a bullish bias. The above chart looks at the very short term picture. The bottom window is the NYSE advancing issues with 4 period moving average and NYSE declining issues with 4 period moving average. Yesterday this indicator had a bullish crossover and remains on a bullish crossover today. Next window up is the NYSE up volume with 4 period moving average and NYSE down volume with 4 period moving average and this indicator also had a bullish crossover and it too remains on a bullish crossover. The top window is the NYSE McClellan Oscillator which closed above “0” and bullish for short term. We are thinking the April 1 high near 207 on the SPY will be tested before a larger decline may develop. The pattern that may be forming is “Three Drive to Top” and market needs one more high to complete this pattern. A bearish sign will be if the SPY makes a new short term high and the VIX makes a higher low.
The Gold Commercials came in at -207,245 contracts as of 4/8/16; previous week reading was minus 207,964 contracts. Though gold may stubble short term the gold stocks may stay strong. Yesterday we looked at the monthly (NYSE:GDX) chart and above is the weekly chart and both are in the bullish mode. Yesterday GDX jumped above the march 2016 high as well as the May 2015 high with a “Sign of Strength” suggests a valid breakout. If the rally is robust on the breakout (which it was), a pull back to the breakout area is common and we think that may unfold in the coming days. In past reports, we mentioned the possibility that a large “Three Drives to Bottom” was forming and this pattern has a minimum upside target to where the pattern began and in this chase would present a target near 27.00. Its common for sideways consolidation to mark the half way point of the move and March’s sideways consolidation would also give a target to 27.00 range. The picture is bullish, and a consolidation to 21.00 is possible where we expect the market to find support.
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