The Ord Oracle - 01-27-2009

 


Today’s volume did not expand (expanding volume on rallies is bullish) and has us scratching our head.  However, today trading did not touch the previous high or low and does not draw a bearish or bullish picture for short term.  There is a gap at 85.75 level that formed on 1/14 and the market may try for that near term.  If the gap is tested on lighter volume then that would be bearish and if touched on higher volume then that would be bullish.   Since the market is not backing away from this gap it would suggest the market will at least test the gap. There are some momentum indicators that are turning up and the first one is the Stochastic in the lower window and suggests the market is starting rally phase.  The next Momentum indicator is the McClellan Summation index on the next page and it is also turning bullish.  We are holding our SPX long position (840.24) for now.


SPY Ord
On 4/2, we Bought ASTM at 1.92, Biotech group.  Long POWR at 13.70 on 12/14/07.

Another short term bullish sign is the Advance/Decline today which ended up +1116.  This strong A/D line most likely pushed the McClellan Oscillator through the “0” and in turn has turned up the Summation index.  When the Summation index is trending up it implies the market is in an uptrend.  The Summation index turned bullish today.    We will watch how the gap on 1/14 is tested.  We are staying long for now.

McClellan Oscillator Indicating Moderately Bullish Position

Below is the monthly $XAU gold and silver index dating back to 1984.   In the bottom window of the chart above is the monthly RSI.  When monthly RSI reaches near 30 a major low can be expected.  We have labeled those instances in the past and had picked out the low in 1986, 1998, 2000 major low and in late 2008.  the second window from the bottom is the Price Relative to Gold ratio.  This ratio measures when gold stocks are cheap or expensive compared to the price of gold. Readings below .175 have produced major buying opportunities.  Notice When Price Relative to Gold was below .175 that monthly RSI also was near 30 and the combined indicators help to pick out the majors low going back to 1984.  Today’s Price Relative to Gold ratio is still below .175 and closed today near .1338 and foretells gold stocks as a group are very cheap compared to gold.  We have also labeled the Elliott wave count from the 2000 low to the March 2008 high and the larger wave count from the 2008 March high to the major low in October 2008.  Our view is that Major 3 up has started from the October 2008 low and implies Major 3 up will hit new highs.  The extreme low near 30 on the Monthly RSI and the Price Relative to Gold below .175 at the October 2008 bottom agrees with this bullish view.    

XAU in a Wave 3 Up

We like AZK, RGLD, EGO and HMY.  Sold PMU on 2/29/08 at 1.20, bought at .81 for gain of 48%.  Long KRY at 1.82 on 2/5/08. We are long PLM at 2.77 on 1/22/08. We are holding NXG, purchased at 3.26.  We are also holding CDE (average long at 2.77 (doubled our position on 9/12/08 at 1.46).  We are holding a long term position in KGC at 6.07 and NXG at 2.26.  We are long the XAU at 162.05 on 12/18/07.

Tim Ord is president, editor and publisher of "The Ord Oracle" established in 1990. His newsletter is a Monday through Thursday email report that trades the S&P, Nasdaq and gold issues. He is frequently listed in the top 10 market timers in the country. If you purchase his book "The Secret Science of Price and Volume" through you will receive a copy signed by Tim.  Visit his website at:  http://www.ord-oracle.com/