The Ord Oracle - 06-10-2008

It appears a possible “Selling Climax” occurred on 6/6. a “Selling Climax” is a big percentage volume increase day compared to the days around it. June 6 volume looks like it increased near 40% compared to the day before volume. Usually these big increase volume days stops the market trend cold. A bullish sign develops when the “Selling Climax” low is tested on lighter volume and then closes above the “Selling Climax” low. This condition materialized yesterday. Also notice that this bullish sign is developing around the support trend line (Red trend line). There are some things wrong with the market such as the Price Momentum Oscillator (PMO) trending and implies the momentum of the market is down and the Summation index so far is trending down and suggest the trend is down for now. If the market holds this level for the next several days then a potential bullish signal could develop for near term.

Below is the SPX with its McClellan Oscillator and Summation index. Today’s negative advance/decline line keeps the Summation index heading lower and implies the short term trend is down. However there is support near current levels on the SPX and today’s modest down day at support suggest the market may be starting to build a base. Expiration week is next week and the market normally has a bullish bias in that week. If market manages to back and fill for the next few days, then a short term bullish sign could develop.

Below is the XAU gold index with its Price Relative to Gold ratio in bottom window. Significant lows form in the XAU when Price Relative to Gold ratio is below .20. Today Price Relative to Gold ratio closed at .1970 and a bullish sign. The XAU chart may be forming a “Head and Shoulders Bottom” pattern where the market is working on the “Right Shoulder” now.  Normally the Left Shoulder is symmetric in price and time. Time wise it appears the market will need couple more weeks to complete. Seasonality is neutral to bearish form now into Early July and therefore we are looking for the market to back and fill probably tell then to form the Right shoulder.  Price wises, XAU may be forming the “Double Hump” the “Left Shoulder” has with today’s decline.   After June, we expect the market to pick up significantly.  We remain bullish on the XAU on the bigger time frames and we are long the XAU from 12/18/07 at 162.05. 

 

 

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, has support near 2.80 range. We are also holding CDE (long at 4.08, support near 3.90). 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.

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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/