The bearish “Rising Wedge” pattern that we mentioned in previous report appears to have completed and the down leg to targets below is starting. Bearish “Rising Wedges” have downside targets to where there began and in this case this “Wedge” pattern began near 124 range on the SPY which equates to 1240 on the SPX. We don’t have the final figures today, but most like the NYSE McClellan Oscillator broke below the “0” and in turn has turned down the McClellan Summation index which implies now that the market is in a downtrend. Also notice that the Price Momentum Oscillator (PMO) is starting to roll over and a short term bearish sign. We are not bearish on the bigger timeframes and it appears this pull back is in the context of an intermediate term uptrend. A bullish signal may get triggered near the 1240 range on the SPX and if that area does not hold then a signal could be generated near the July low at the 1200 level. We sold our SPX position on 8/7 close at 1266.07 for a 1/2% gain and are now flat.
A sector that is showing bullish intermediate term signs (along with the gold issue market) is the energy sector (XLE). The energy sector got hit hard over the last month and the Summation index is now trading below -1200 an extreme oversold level. We have marked on the chart with red arrows when the McClellan summation index turned up from below -750. This condition has lead to intermediate term rallies that last several months and rallied near 20% or more. Current the Summation index is below minus 1250. The Oscillator has been rising over the last month with the XLE declining and this condition shows that fewer stocks where participating on the decline as the decline matured and showed the decline was very weak. A bullish signal will be triggered when the Summation index turns up.
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
