The Ord Oracle - 07-29-2008
The SPY on July 23 tested the previous high of July 2 on higher volume. A test of a previous high on higher volume implies that high will be at least tested if not exceeded and keeps the trend bullish. To get through the 129 resistance level on the SPY, we will need to see a “Sign of Strength” (SOS) through 129. An SOS is a wide price move with higher volume then the previous highs at 129. If we do see an SOS through 129, then this condition will signal a target to the 134 range. Today’s Advance/Decline line was very strong which in turns keeps the McClellan Summation index heading higher and bullish. We are long the SPX on 7/17/08 close at 1260.32. We are heading to a Family reunion in Colorado at the end of the week. There will be no updates for Thursday or Friday. We will be back the following Monday. Sorry for the inconvenience.
New Highs and New Lows (NHNL) refers to stocks reaching their highest or lowest price during the most recent 52-week period. The NYSE 10-dma high low differential refers to 10 day moving average of the NHNL. It’s rare to get NYSE 10 day moving average below -600. Not counting the current reading below -600 it has happen twice before, once in 1970 and again in 1998. Both times after reading below -600 the market went on and produced nice gains in the months to come. Therefore, the mid July low appears to have been a climatic low and other then a possible re-test of the July low, a worth while rally should materialize. After a -600 reading is recorded on NYSE 10 DMA of High-Low Differential, this index at least rallies back above the “0” level. Yesterday’s close came in at -194.60 and has room to rally more. The current market may be historically oversold enough to stage a multi month rally. We are long the SPX at 1260.32.
Sold 5/27/08 IVAN at 2.70=6% gain. Bought Ivan (Invanhoe Energy) 4/13/06 at 2.55,Energy stock. On 4/2, we Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.
Above is the weekly chart of the XAU with its Price Relative to Gold ratio and Commodity Channel Index (CCI) dating back to 2000. Price Relative to Gold ratio below .20 on the weekly chart has lead to intermediate term rallies and we expect the same here. The month of July ends Thursday and if Price Relative to Gold ends below .20 Thursday’s then a longer degree and more important bullish signal will be triggered. At the time we where writing this report, Price Relative to Gold was at .1807 and the lowest reading since the 2000 bottom. The Price Relative to Gold at the 2000 bottom came in near the .16 level. The lower Price Relative to Gold ratio goes the more bullish the outcome for the XAU. We have labeled the instances on the chart above when the XAU has jumped resistance (above the previous highs). Once the XAU has jumped above the previous highs then the previous highs become support. Since late 2007 the XAU has developed a trading range where support comes in near 160 and resistance comes in near 210. With the CCI below -100 and price Relative to Gold at .1806 a very bullish setup has developed. Anniversary dates of previous highs and lows in the market can predict turning points in the market. Last years low in the XAU came on 8/16/07. The XAU may wait until then before the next up move begins. Normally Pessimism runs high before the next up leg begins. Price Relative to Gold is a way to measure pessimism and the lower the ratio the less the public interest in buying it. The current low ratio is the lowest reading in years and predicts that the gold stocks are on the verge of a powerful rally. 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.
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
