The Ord Oracle - 11-18-2008
On 11/13 the SPY tested the “Selling Climax” low of 10/10 on lighter volume and then closed above the “Selling Climax” low triggering a bullish signal. Over the last three days the SPY has worked lower on reduced volume and shows downside forces are weakening and a bullish sign. A bullish downtick reading of -1400 was recorded on 11/13 which shows exhaustion to the downside. A possible test of the 11/13 low may be in the making and as long the test comes on lighter volume the bullish signal will be in force. On the weekly charts, last weeks test of the “Selling Climax” week low on lighter volume and then closes above that low has triggered a bullish signal on the weekly timeframes. Long SPX on 11/13/08 at 911.29.
On 4/2, we Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.
On previous report, we pointed out that when the Oscillator reaches extreme over sold reading (current market hit -400 on “Selling Climax low of 10/10”) and then rallies strongly and hits extreme overbought reading (current market hit +320), it triggered an intermediate term bullish sign. The buy signal comes on the next pull back which normally at least tests the “Selling Climax low” and in this case it was 10/10 low. On 11/13 the SPX tested the “Selling Climax” low of 10/10 on about 30% lighter volume and then closed above the 10/10 low and triggered a buy signal by that method. Sometimes the test (11/13) of the “Selling Climax low” (10/10) is tested and may be what is going on now. As long as the test of the test is on lighter volume then a bullish outcome should be expected. Right now the NYSE McClellan Summation index is still trending down and implies for the very short term the market is still in the pull back stage. The next time the Summation index turns up then this condition should imply we have seen the bottom process completed. Also to prove the point, the market should produce a “Sign of Strength” on the next rally phase. This “Sign of Strength” is confirmation that the uptrend has started. Normally the Last Couple of days of Option Expiration week are up. Therefore, if the market is going to tests the 11/13 low it should do it tomorrow or Thursday.
I have been pointing out the last couple of days that GDX McClellan Summation index is in an uptrend which implies GDX is in an uptrend and therefore there is a possibility that GDX has seen its low. The chart above shows the XAU with its monthly Full Stochastic, Commodity Channel index (CCI) and Relative Strength Index (RSI). There have been three times since 1984 that Full Stochastic, CCI and RSI have been oversold on the month chart at the same time, once in 1985 (lead to 150% rally in a year), once in 1998 (lead to 60% rally in 3 months) and currently. To confirm the bottom the Full Stochastic, CCI and RSI need to turn up which at the earliest will come at the first day of next month (need November to close to have monthly chart update). If the Summation index continues to climb higher into month end on GDX then most likely the monthly Full Stochastic, CCI and RSI will turn up. In any case to have monthly Stochastic, CCI and RSI all oversold at the same time is a rare and bullish event.
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 (average long at 2.77 (doubled our position on 9/12/08 at 1.46). 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
