The Ord Oracle - 09-02-2008
Above is the SPX with it’s McClellan Summation index. The SPX showed a positive Advance/Decline line even though the SPX was down five points. Today’s Advance/Decline line came in at plus 353 and keeps the Summation index heading higher. When the Summation index is heading higher it implies the SPX also should head higher and a bullish short term condition for the market. We are not wildly bullish here and for the matter we are not wildly bearish. We are looking for and edge and at the moment we don’t see one that would lead to a high probability trade. We are staying flat for now. We sold our SPX position on 8/7 close at 1266.07 for a 1/2% gain and are now flat.
The Energy sector (XLE) is in the Ord-volume format. The Ord-Volume format measures the average volume between the swings highs and lows so a trader can identify which way energy is pushing. On last Thursday’s report we said, “The recent rally leg up for the last three days showed a decrease in Ord-Volume which shows the rally leg did not have a lot of energy. This condition may imply that the XLE may pull back to support again near the 73 range.” Indeed the market pulled back and pulled back below support of 73. However today gap down on XLE was especially large and may be an exhaustion gap. An exhaustion gap comes at the end of a move and today’s low may begin a short term bottoming process. The pattern that may be forming is a possible “Head and Shoulders bottom” and today’s decline may be the start of the “Right Shoulder”. The XLE McClellan Summation index is deeply oversold and in an area where intermediate term lows have form in the past. Tomorrows trading on XLE may clear the picture for the short term. The intermediate term picture appears to be forming a bottom. long XLE at 75.90 for now.
Long XLE (energy sector) at 75.90 on 8/21/08. On 4/2, we Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.
Above is the COT (commitment Of Traders) report for Gold (courtesy of www.sentimentrader.com). It’s a very good sign for a coming bull rally in gold when the Commercials (third window from bottom) are buying and the Small Speculator (bottom window) is selling. When these to groups of trader’s line up apposed to each other (like now, Commercials on buying spree and Small Speculator on a selling spree) a bottom in the gold market is imminent. On the far right of the chart above is the current reading for the COT which shows that the Small Speculator are big sellers and Commercials are big buyers and are opposed to each other. Today’s gap down in Gold looks like an Exhaustion gap which is the type of gap that comes at the end of a move. Price Relative to Gold ratio hit an extreme low again today near .1650 and history has shown that when this ratio is this low then that it has been an excellent buying opportunity. CDE showed a bullish pattern called a “Spring” today (light volume test of previous low) and my have completed the bottoming process. NXG produced a bullish candlestick pattern called a “Hammer” and a bullish sign for near term. 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. We are also holding CDE (long at 4.08. 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
