GDX Has Head And Shoulders Top And Right Shoulder Forming Now
Tim Ord | Apr 01, 2015 04:12AM ET
Monitoring purposes S&P 500; Flat.
Monitoring purposes Gold: Gold ETF GLD long at 173.59 on 9/21/11.
Long Term Trend monitor purposes: Flat
Timers Digest ranked the Ord Oracle (NYSE:ORCL) #6 in performance for 3 months updated March 9, 2015.
The top window is the McClellan Oscillator which closed today at -1.69 and below “0” and a short term bearish sign for the market. The second window down is the NYSE up volume/Down volume with 5 period MA and NYSE down volume/Up volume with 5 period MA. These moving averages remain on a bearish crossover. The bottom window is the NYSE Advance/NYSE decline with 5 period MA and NYSE Declining/NYSE Advancing with 5 period moving average and these two moving average are also on a bearish crossover. In the middle is the SPY chart. Today’s decline tested yesterday’s up gap on higher volume and suggests this gap will not support the market and a bearish sign. Today the TRIN closed at 1.49 and Ticks closed at -143 and a modest bullish short term sign and imply an up day tomorrow or Thursday. What may happen in the following days is a test of yesterday’s high followed by another decline that could test the February 3 open gap near 201.50. If our indicators turn to bearish on the possible bounce short term we will look for a sell signal near Yesterday’s high.
Our short term theme remains, which is, “Where General Electric Company (NYSE:GE) goes so goes the market”. We have pointed out with blue arrows where GE made lower highs as SPY made higher highs and this negative divergence produced short term tops in the SPY. The recent top in the SPY saw GE made a lower high as SPY made a higher high. Notice that GE broke to a new short term low last week and SPY made a higher low suggesting SPY may break to a new short term low. The bottom window is the VIX. Worthwhile bottoms have formed in the SPY when the VIX reached above 22; which shows a lot of fear in the market. The failed low back in October 2014 and the recent market low on March 11 showed the VIX topping near 17.50 and both did not put in a lasting bottom. Market bottoms form on fear and panic and the VIX right now is not showing that Fear is high enough to form a lasting bottom in the market. The next worthwhile bottom in the market should see the VIX > 22.
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The pattern that may be forming for short term on Market Vectors Gold Miners (ARCA:GDX) is a Head and Shoulders top and the Right shoulder is forming now. We have draw cycle vertical lines and the next line is due April 20 and could represent either the Right Shoulder completion or the final low in GDX. This potential Head and Shoulders top has a downside target near 13. The monthly charts are showing bullish divergences and the next major cycle low is due in July or August and therefore it could get messy between now and then. There could be a possible short term bounce on GDX to make the Right and left shoulders more symmetric in time and a better setup for a short signal. Neutral for now on GDX.
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