The Ord Oracle - 07/22/2009

Market is at the pinnacle area for a reversal on a continuation move up.  The current price on the SPX is where the 200 day EMA, January high and Downtrend line from the May 2008 top comes in.  To get through this resistance zone, the market should produce a Sign of Strength (SOS) which is strong price move and big volume.  We got the strong price move but big volume is not present and is the reason we are scratching our head at this juncture.  Normally if volume does not confirm the price move then usually the market will fail.  We have been watching the daily volume closely on the SPY.  So far the SPY has not touched it’s previous high of June 11 but is very close in doing so.  The SPX did test it’s 6/11 high today and came in 8% lighter which is bearish.  The next day or two should clear the picture, either the market pull back or we will cover our short.   We are short the SPX at 883.92.

We Bought ASTM at 1.92, Biotech group.   Long POWR at 13.70 on 12/14/07.
 
Below is the ratio of the VIX to VXV.  Readings below .90 have produced tops in the market.  This is evidence that a turn in the market is close.  However if volume picks up here to near 6 billion then we will be forced to cover our short and look to get long.  The market is at the pinnacle of a price move.  If confirmation of a price move up is obtained then we would expect the rally to go to 1150 to 1200 range on the SPX.  If this is a market top like we expect then a pull back to 800 range is likely.  

Below is the weekly chart for GLD (Gold ETF).  The weekly pattern forming on GLD looks like a Head and Shoulder bottom where the October 2008 low is the Head and currently GLD is working on the Right Shoulder. We think eventually GLD will break above the Neckline which is near 100 and head to the H&S target near 130 range.  The Commitment of trader (COT) report show that the commercials are 182 K short Gold.  Commercials are always short because they mind Gold and hedge there product in the futures market.  We they are real bullish they short less. The current position of 182 k short the gold contracts is neutral at best and more back and filling may be needed before the Commercials get down to less then 150 k short.  Support lies near 90 on GLD and we 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