The Ord Oracle - 02/10/2009
Welcome to the week before options expiration week where whipsaws and exaggeration moves are common. The master technical great one, Don Wolanchuk pointed this out to me a number of years ago. We refer the Wednesday of the week before Option expiration week in owner of Don, “Weird Wally Wednesday”. This one is for you Don. The ARMS close day of 9.84 on 12/1/08 at 81.86 has so far support the market and we believe this test will also be supported. On January 20 the ARMS index Closed at 3.06 with a downtick close of -945, both of which are bullish. Today the ARMS index closed at 5.33 and the tick closed at -829. This blow out in the ARMS index as well as the tick index suggests the decline is done or about done. Support comes in near the 80 range on the SPY and the market could wiggle a little lower but does not have to. Normally when the blowouts occur the week before Option Expiration week (this week) the rally will wait and start during Option Expiration week. Therefore we have time to pick our spot. Bottoms form when there is panic in the streets and the high ARMS index close and low downtick close readings help to identify that panic. Markets are at are near a low.
Long XLF at 9.50 on 1/30/09.
On 4/2, we Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.
We don’t think a significant decline is beginning here. The positive divergence setup on the Advance/Decline line that appeared from late December to late January should produce a rally into the March April Timeframe.
We have updated the above chart to yesterday’s close. GDX has worked modestly higher since early January but the McClellan Oscillator was making lower highs and shows that leadership is narrowing on the rally in GDX and a bearish sign. Therefore the current rally in GDX is having some difficulties. However the Commitment of Traders report (COT) does not show any worthwhile top forming here. The COT Small Specs. are still in the buy area but the Commercials has backed off some and in the neutral area, but as a whole the COT is still bullish. Our view is that there is a possibility GDX could pull back the low that occurred in mid January near the 27.50 range. The bigger trend is still up and there may be another good buying opportunity in the next few days and especially if GDX pulls back near 27.50 range.
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
