With this pair of lunar astrological events on Thursday, the next two days could be much more interesting than the low volume market has been.
It appears that we are at a buy decision point on the IWM at the close after today's sell off. This occurred without the IWM market actually crossing the trend-line to trigger the buy. Likewise SPY is up against large August call resistance at 218.5. Its still possible for the options market to run the SPY up to the 220 level where a huge number of calls are about to expire worthless. If the market jump starts with a significant gap higher on Thurs, these calls could generate delta hedging buys sufficient to generate a thrust to the 220 level sometime before the close on Friday. Likewise, the 218.5 level is where a sell off could structurally begin based upon the action of the last two days. So the market left things in a neutral condition at the close. I believe it to be a higher probability negative position, based upon the ellipse as discussed below.
However, for GLD, the full moon SHOULD signal a Buy. In general the bottom has tended to occur a couple of days after this event recently. I am skeptical that today was THE low for the monthly cycle, in light of the frantic oscillations that have taken place between the 10 DMA and the 20 or 34 DMA (important for gold) over the last two weeks, and I have noted that markets sell off more after this sort of behavior before the buy cycle takes hold. The oscillations along with the fact that I have noted GLD has actually sold off with the SPY market for the most part throughout the last two weeks makes me think lower GLD levels will occur over the next two days due to the ecllipse. With a larger sell off, the potential exists for GLD to go down to 124 over the next couple of days. It also appears the GDX stocks are reacting more negatively (leading) on the way down, so I am particularly cautious. The breaking of the support level along with a rally back to resistance as occurred today, is normally a precursor to lower lows. SLV is more vulnerable and doesn't have the reactions on the buy side that GLD has if your short.
The lunar ellipse is the wild card in the mix, making tomorrow or Friday different for GLD. It simultaneously occurs on the full moon. Winski indicated that within one day of the ellipse, the SPY market has a large down day (I read this as 1-2%), which could occur tomorrow or Friday. Today's SPY 218.5 area would be an ideal place from a structural standpoint to begin a larger sell off that runs the market lower through Friday.
Schaeffer did a statistical study that indicated the six consecutive down DIA days that recently occurred, call for a slight down market two weeks out, but new highs subsequently followed. As a result, I have hedged short IWM two weeks out even if the market sells off 1-2% over the next two days and am long SPY through Friday, if we delta hedge run at 220 this week. If the market goes down Thursday by 1-2% due to the lunar ellipse, I expect GLD & SLV will follow for new lows. Hence I continue to hold short GLD & SLV for the next two days before reversing based upon the full moon. GLD should run long over the following two weeks, even if the market heads down after the ellipse event. The market may rally before a final decline into mid-Sept. All markets are trading based upon the dollar at this point, so keep an eye on $USD for confirmation.
Edited by thoughtpwr, 17 August 2016 - 04:47 PM.