The Ord Oracle - 04/13/2009

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The pattern that may have formed over the last three weeks on the SPY is a bearish “Rising Wedge”.  This pattern develops when the upper and lower boundary lines meet out into an apex and the volume gradually decreases as the apex is approached.   The SPY is also near trend line resistance near 85 and today’s high tested last Thursday’s high on lighter volume and suggests the upside is meeting resistance.  The momentum indicators such as MACD, Bullish Percent index and McClellan Summation index for now are still trending up and suggest the uptrend is still in force.   Either market shows a “Sign of Strength” through the blue trend line to resume the uptrend or “Rising Wedge” becomes in play and pulls back to 76 range.

Below is the 60 min. chart of the SPY.  Top window is a 100 period moving average of the tick index.  Tops normally form near +100 on this indicator but need to turn down from above +100 to confirm the top and so far this indicator has not turned down.  The Tick index can remain overbought for an extended time like it did back in April and May of last year (see chart above).   To help confirm the potential for a top the put call ratios for both the equities and indexes need to turn up (see chart above) and so far that has not happen either.  The tick index and the Put/Call ratios so far have not triggered a sell signal. Still flat for now.

We still own ASTM a biotech stem cell reach company (but does not do stem cell research on embryo’s).   Long POWR at 13.70 on 12/14/07.
 
The “Three Drives to Top” pattern may have been completed on GDX.  This pattern has a downside target on GDX near 27.  Notice on the chart above of the McClellan Summation index for GDX that the McClellan Summation index has turned down, which implies that GDX has also turned down.   The timeframe for the next significant low may show up in the late May or June period.   We went back to Flat on the XAU on 4/3 and may go long again near the 27 area on GDX which equates to 100 area on the XAU.