The CPCE: Time To Be Alarmed?
Tim Ord | Apr 24, 2014 10:43AM ET
- Monitoring purposes S&P 500: Sold SPX on 4/1/14 at 1885.52 = gain 1.78%; Long SPX on 3/26/14 at 1852.56.
- Monitoring purposes Gold: Gold ETF GLD long at 173.59 on 9/21/11
- Long Term Trend monitor purposes: Flat
We posted this chart yesterday and updated to today’s trading, which is the CBOE equity Put/Call ratio (CPCE) (bottom window). It has been a short term bearish sign for the market when the CPCE has multiple readings below .50 near the same price level on the SPX. Today marks the fifth time since the beginning of March where the CPCE recorded a reading below .50 all of which came near the 1880 range. Its also note worthy that yesterday and the day before where both below .50 on the CPCE which adds to strength of this area as resistance. The ticks had an exhaustion reading of plus 1235 on 4/15 which was 35 SPX lower and suggested upside was limited. The McClellan Summation index closed yesterday at +754 and normally deep declines in the market don’t begin with that high of McClellan Summation index. Normally deep declines can begin when the McClellan Summation index turns down below +500. We don’t have a sell signal here but indicators suggest the rally may stall near current levels. Staying neural. See us on the current cover of “Timer Digest”.
The chart above is the Bullish percent index (bottom window) that measures the percent of stocks in the NYSE that are on point and figure buy signals. It has been a bearish sign for the market when the bullish percent index first trades below the 60 level than fails to get above 70 on the next rally phase in the market. We have pointed out those instances with blue lines. This condition was present at the last high in the SPY in early April. The market made a bottom on April 10 and has rallied since than. What we are watching for is what the Bullish percent index will do; turn back down near 70% (or lower) or continue higher. With the CPCE ratio showing resistance around 1880 on the SPX, the Bullish Percent index could turn down near current levels. If the Bullish Percent index stalls near 70% bulls and turns down, than a worth while decline could be expected. The Bullish Percent index stands at 67.09% and still rising. If however, the bullish Percent index continues higher past 70% bulls than that condition would imply “all clear” for the market.
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The Neckline of a Head and Shoulders bottom comes in near 24 on Market Vectors Gold Miners (ARCA:GDX) and should act as support and it appears to be the case. On Monday GDX tested the previous low of 3/27 on lighter volume and than closed above the 3/27 low triggering a bullish sign and gave a short term target to next resistance level which was the gap on 4/15 near 24.07 range. Today that gap was tested. If a gap is tested on equal or higher volume than that gap will not act resistance and market in general will head higher. Today’s gap was tested on equal volume and suggests GDX will move higher. GDX made a lower low than the previous low on 4/21 but the GDX/GLD ratio; True Strength index and RSI made higher lows and all created a bullish divergence and add to the bullish picture. GDX appears For examples in how "Ord-Volume" works, visit www.ord-oracle.com. New Book release "The Secret Science of Price and Volume" by Timothy Ord.
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