The Ord Oracle - 08-05-2008

tim_ord's picture
August 5, 2008 by tim_ord

SPY needs to break 134 with volume to continue run higher

The SPY has built a trading range for two weeks and implies when the break out comes a nice run in the market should materialize. Today rally was decent but volume is less then the previous high recorded on 7/30 and shows that today’s rally was not as strong as the 7/30 rally and a short term negative on the market. Also the closing tick on the NYSE came in at +897. Closing tick readings exceeding +900 can turn the market down in a day or so. The last time the tick closing where this high came on 7/30 with a closing tick reading of +1065 and that tick closing turned the market down for three days.   We are bullish here but there could be some more backing and filling before the market jumps the 129 area.   If short term the SPY does jump the 129 range with big volume and wide price spread then the condition would give an upside target to 134 range on SPY which equates to 1340 on the SPX.  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.

MTXX shakeout similar to GDX setup

Above is a stock pattern on (MTXX) that we believe that GDX is currently forming. The pattern is a break below support with high volume that pushes the Commodity Channel index (CCI) in oversold territory. The Downside breakout fails to hold and the stocks turns around and breakouts out to upside. Currently GDX on the weekly timeframe has broke support and httphas pushed the CCI down into the -200 range and similar setup to the stock above. Also notice that the same pattern appeared back at the August 2007 low in GDX and the expected outcome prevailed.   

GDX looks to be a shakeout

XAU price relative to gold cheaper than 2000 bottom

The Price Relative to Gold ratio at the 2000 bottom came in near the .1650 level and today this ratio hit .1645 and shows gold stocks are at an extreme inexpensive value. The lower Price Relative to Gold  ratio goes the more bullish the outcome for the XAU. The current low ratio is the lowest reading since the 2000 bottom and predicts that the gold stocks are on the verge of a powerful rally. For a bottom to form, a market needs panic and panic is present in the gold issue market. This current bottoming process is no different then the previous panic bottoms in the gold market. If no panic was present then that would be something to worry about. Last years low came on 8/16 and that may be the time when gold stocks turn up. Since the weekly CCI is below -200 now, this condition would imply the decline is done or about done.  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 you will receive a copy signed by Tim.  Visit his website at:  http://www.ord-oracle.com/