The Ord Oracle - 06/16/2009

Over the last couple of weeks there have been several divergences showing up.  Annual new highs new lows ($NYHL) made lower highs as well NYSE McClellan Oscillator  made lower highs as Spy made higher highs.   The NYSE McClellan Summation index did not confirm the breakout of June 1 when the SPY jumped above the 5/8 high which also was a negative divergence.   The last two days down in the SPY did not show an increase which we would have like to seen to show energy had switched to down but not every turn in the market shows ideal technical behavior   The market produced a gap down yesterday (94 on SPY) and that gap may act as resistance.  We are short the SPX at 883.92.

We showed this chart last week and have updated it to tonight’s close which is the ratio between the Nasdaq Volume to the NYSE volume.  When this ratio reaches this high intermediate term tops have formed in the past and we think it is telling the same story now.  The second window from the bottom is the RSI.  We have drawn blue trend lines on this chart.  When the RSI falls below 50 it implies a top was seen.  Today the RSI closed at 48.41 and has triggered a bearish sign. Bottom window is the 20 EMA of the Tick index.  Normally the Spy follows the direction of the ticks.  The ticks have been moving lower for the last month as the SPY moved modestly higher and did show the buying interests were leaving the market.  Over the last few days this indicator hit new recent lows and suggests the buying interest is turning into selling interests and a bearish sign. Today’s push to new recent lows on the Ticks suggests the market has topped out.   When the Ticks get below “0” then a bounce could occur.  Today’s 20 day EMA of the tick closed at 124.50 and not below the “0” line yet.  In general we expect the Market to work lower into July or August. 

Below chart is courtesy of www.etfinvestmentoutlook.com. The McClellan Oscillator is an Advance/decline line indicator.   Yesterday it hit a new recent low and is showing most stocks in GDX are declining.  Also the McClellan Summation index had a bearish crossover yesterday and triggered a sell signal and implies a consolidation that may last several weeks.  Previous sell signal by bearish crossovers of the McClellan Summation index with the 20 EMA appeared at the July 2008 top and the February 2009 high (see chart above).     This pull back could last in July and maybe August.  Physical Gold and the Gold ETF (GLD) may find support near 900 and 90 respectively and we will be holding our GLD positions that were bought at 89. 

Long GLD at 89 on 4/24/09. Long KRY at 1.82 on 2/5/08. We are long PLM at 2.77 on 1/22/08. Holding CDE (average long at 2.77 (doubled our position on 9/12/08 at 1.46, Sold 5/13/09 at 1.55=6% gain). Bought NXG at 3.26 on 6/4/07.  We doubled our positions in KGC on (7/30/04) at 5.26 and we now have an average price at 6.07.  Long NXG average of 2.26.   For examples in how "Ord-Volume" works, visit www.ord-oracle.com.