The Ord Oracle - 07/30/2009

Normally the VIX bottoms when SPY tops (see blue arrows).  The VIX bottomed on 7/24 and since then the SPY was worked higher.  The MACD and Full Stochastics on the VIX both have gave buy signals and implies the VIX Should work higher which is bearish for the SPY.   If the MACD and Full stochastics remain on a buy signal for the VIX then SPY should start to work lower. 

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.
 
The pattern forming may be a bearish “Broadening Top” or five point reversal.  Today’s rally tested the previous swing high of 11/5 (11/5 had 390 million shares) on volume of 221 million shares and then closed below the 11/5 high and triggered a bearish light volume re-test.  Today’s candle stick pattern drew a bearish Shooting Start.  A lot of the time a bearish shooting Start high is tested.  The advancing volume on advancing stocks is showing a bearish divergence like it did back at the January high and gives the VIX bearish signs company.  To cancel out our bearish view is for volume to pick up substanously to 300 million shares or more.  However volume has been decreasing since April from 300 million down to near 200 million shares now.  Our view is that A broadening Top is on the five reversal and once completed should break below 87 and head to 80 range or lower. 

 
We wanted to show a short term picture on what the market may be saying.  Instead of commentary on GDX (which we still remain neutral) we will show the QQQQ.  The QQQQ tells a better story of what is going on then the SPY because the QQQQ tested it’s gap where SPY was shy of the gap.  Above is the QQQQ hourly chart.  This morning the QQQQ gapped up strongly on fair volume then traded sideways rest of the day and then sold off hard near the close on higher volume then the volume when the gap formed this morning.  A test of a gap level on higher volume suggest the gap does not have support and at some point the gap will be exceeded to the downside.  A good signal to say the final high has been seen is that today’s high be tested again on 10% lighter volume and then closes below today’s high.  Since the gap has already been tested on high volume it would suggest the gap will not hold as support on the next pull back.  Another sign that a top is in would be for the SPY to close below Wednesday low (96.98) on higher volume.  We decided to hold our short position in that the larger pattern forming was bearish.  Its evident that we should have covered our short and re-shorted.  However this pattern is very near to completing and we will hold our short.

We are 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.