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#1 OEXCHAOS

OEXCHAOS

    Mark S. Young

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Posted 19 July 2012 - 05:10 PM

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For 30 to 90 days horizons for SPX: Flat

Monitoring purposes Gold: Gold ETF GLD long at 173.59 on 9/21/11.

Long Term Trend monitor purposes: Flat

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The “Three Drives to Top” pattern may be still playing out, which would have a down side target to 130 range on the SPY. The Volume since this potential “Three Drives to Top” pattern has been forming has been decreasing suggesting upside energy is weakening. The TICK nor the TRIN said anything bearish today but could produce bearish readings in the next couple of days. Today the SPY hit a higher high and McClellan Oscillator made a lower high and a negative divergence. Also notice that the SPY closed higher than yesterday and McClellan Oscillator closed lower showing weakness in the market. A lot of the time the Ticks and TRIN will produce a bearish closing signal and that may happen this time around. For the intermediate term view the McClellan Summation index closed at 666.52 (close above +650 implies bullish intermediate term) and shows initiation for an intermediate term uptrend. Therefore we will be looking for a bullish signal on the pull back. The 130 range on the SPY is a possible target for bottom.

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There are several negative divergences showing up that suggest the rally may end soon. The chart above is on the hourly timeframe. The upper window is the Junk bond and investment grade bond ratio (JNK/LQD). When this ratio is rising than Junk bonds are outperforming investment grade bonds and therefore investors are seeking risk and bullish for the market and vice versa. At the April high in the SPX the JNK/LQD ratio started to drop two weeks prior and produced a negative divergence and a warning sign that the SPX is near a high, of which it was. Notice over the last week that the SPX has been moving higher and JNK/LQD has been moving lower and suggests the SPX is nearing a high. The bottom window is the Ishares Barclay 20+ year Treasury Bond Fund (TLT) which normally trades opposite of the SPX. When TLT and SPX are trading in the same direction than that produces a negative divergence. Over the last three week or so both SPX and TLT are trading higher and a bearish divergence. Rally could push a little higher but with the negative divergences suggest a pull back should start soon.

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This is on of the gold stocks we are watching. Its not on a buy signal but there are bullish signs. The bullish signs are a monthly RSI below 30 than turns up or is giving a bullish divergence (this one is giving bullish divergence). A monthly Slow Stochastics that turns up from below 20 (this one hasn’t turned up yet). Notice that GBG has broke below the previous lows of 2008 and 2005. A close back above the previous lows (near .80) will produce a bullish pattern called a “Shake Out”. This pattern says if you can’t hold the previous low it will try and take out the previous highs, which in this case would give a target to 3.00. We will be looking at other bullish setups on Gold stocks in the weeks ahead.

Long GDX at 58.65 on 12/6/11. Long SLV at 29.48 on 10/20/11. Long GLD at 173.59 on 9/21/11. Long GDXJ average 29.75 on 4/27/12 Long BRD at 1.67 on 8/3/11. Long YNGFF .44 on 7/6/11. Long EGI at 2.16, on 6/30/11. Long KBX at 1.13 on 11/9/10. Long LODE at 2.85 on 1/21/11. Long UEXCF at 2.07 on 1/5/11. We will hold as our core position in AUQ, CDE and KGC because in the longer term view these issues will head much higher. Holding CDE (average long at 27.7.Long cryxf at 1.82 on 2/5/08.KGC long at 6.07. Long AUQ average of 8.25. For examples in how "Ord-Volume" works, visit <a href="http://www.ord-oracle.com/">www.ord-oracle.com. New Book release "The Secret Science of Price and Volume" by Timothy Ord, buy on www.Amazon.com






Mark S Young
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