S&P 500 And Gold: Are Big Moves On Horizon?
Tim Ord | Dec 01, 2021 11:49AM ET
Monitoring purposes SPX: Long S&P 500 on 11/30/21 at 4566.97.
Monitoring purposes GOLD: Long VanEck Gold Miners ETF (NYSE:GDX) on 10/9/20 at 40.78.
Long Term SPX monitor purposes: Neutral
On Friday’s close, the TRIN jumped to 1.59, and the ticks closed at -181, both in bullish territory. The volume jumped on the SPY, producing a “selling climax." Volume jumped again today to even higher levels suggesting another “selling climax.” The two-day TRIN closed today at 3.21. Previous two-day TRIN closings near 3.00 and higher came near important lows. Panic is present in the TRIN, CBOE Volatility Index and CBOE Vix Volatility readings when the market bottoms on panic. We are long the SPX on 11/30/21 close at 4566.97.
Yesterday, the Bollinger band for the VIX, along with its RSI reading, were both at bullish levels. Above is the VIX-VVIX ratio, with its RSI reading. Significant lows happen when the RSI of this ratio reaches above 70. Last Friday, the RSI for this ratio closed at 88.11, while today's reading was 70.70. Panic is present, and markets usually bottom on panic.
In this chart we can see the current setup more clearly. A huge base has formed on this ratio dating back to 2013. The longer the base, the longer the rally will last. The hard part is knowing when the base is completed. One way to know it is if it breaks above the red line drawn on the chart near the .08 level. Another indicator is when the Bollinger Bands are starting a pinch, which is happening now.
There are two trend lines drawn on the monthly XAU/Gold ratio coming together near current prices; one is the red line near the .08 and the other is the blue line connecting the highs going back to 2006, which also comes in near .08. The two trend lines should appear simultaneously to confirm a breakthrough, which we expect to happen in the coming weeks.
The market has been relatively quiet, but our readings indicate that it could be a “calm before the storm” scenario. With the Bollinger Bands pinching on the monthly XAU/Gold ratio, a significant move should be near.
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