Market Analysis: Looking For The Next Low, Then Higher Highs
Tim Ord | Jul 10, 2014 05:36AM ET
Monitoring purposes SPX: Neutral
Monitoring purposes Gold: Gold ETF GLD long at 173.59 on 9/21/11
Long Term Trend monitor purposes: Flat
It is said “where ever General Electric (NYSE:GE) goes so does the S&P”. The second window down from the top is GE and the bottom window is the SPDR S&P 500 (ARCA:SPY). The lines done in blue represent where GE made higher lows as SPY made lower lows and a bullish divergence for the SPY. The lines done in red show when the SPY made higher highs and GE made lower highs and a bearish divergence for the SPY. Notice that GE has been making lower highs from early June and SPY has been making higher highs since early June and if GE is the correct foreteller again than SPY may consolidate near term. The door is still open for the SPY to pull back to support near 192 range.
The pattern “Third Time Up” we talked about yesterday is still in play and suggests a short term consolidation in the market. Previous important lows formed when the TRIN closed above 2.00 (identified with blue arrows). We have also identified times when the TRIN closed above 1.50 with is noted with red arrows. Those times represented when the SPY was more or less at a minor low and the TRIN closed yesterday at 1.58 and could suggest a minor low is forming near yesterday’s low at 196 level. To help support that idea, we will need a test of yesterday low on lighter volume and another TRIN close above 1.50. However if volume picks up on the test and TRIN fails to get above 1.50 than most likely the market will head lower to support near 192 which is still our scenario. With the McClellan Summation index above +1000, we are not looking for a dangerous decline here. Once the next low is found we are looking again for the market to make higher highs. There are cycles for a low due at the end of this month. Neutral for now.
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Above chart is the Gold August 2014 commodity, courtesy of www.barchart.com. Even though both Market Vectors Gold Miners (ARCA:GDX) and Gold where up today the Commitment of Traders report for gold suggests upswing in gold is near an end, at least in the short term. The Large Speculators (dumb money) on in the largest long positing in gold going back one year, while the Commercials (smart money) on in the largest short position in gold. Either the smart money or dumb money are going to be right at this junction and the smart money (Commercials) normally have won. We don’t have a cycle low due until later this month to early next month and it would make since for a pull back into that time frame. Picture should be clearer later this month. Staying neutral for now. For free 30 day trail drop a note to tim@ord-oracle.com.
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