Ord Oracle 11-5-2008

We are bullish intermediate term, however for short term a pull back is likely. Yesterday the SPY tested the gap of 10/15 on about 20 less volume and suggests the gap has resistance and a short term bearish sign. Also as the SPY rallied from 10/28 where volume gradually decreased and suggest upside energy was weakening and another short term bearish sign. Today SPY retraced and should retrace down to first support near 90. There is still an outside chance that market may test the low of October 10 near 83.58. On this potential pull back we will be looking to buy the next intermediate term bullish signal. Our upside target will be where a gap form on 10/6 at the 107 level (see chart above). We are staying flat for now. We Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.

The Volume Trend Oscillator (VTO), Bullish Percent Index (BPI) and NYSE McClellan Summation index are all on intermediate term buy signal and bullish for the intermediate term. However, Short term picture is ripe for a pull back. Yesterday the NYSE McClellan Oscillator reached +320, a feat it has only reached once before in the past 12 years and that was back in 2004. An Oscillator reading that extreme is very bullish for the intermediate term but for short term it’s extremely overbought and implies a pull back should start immediately. Back in 2004 when the Oscillator reading reached +300, a pull back started that last a couple of weeks and the pull back tested the previous lows. After the pull back was completed in 2004 the market went on to break to new highs. Our present +320 Oscillator reading suggest a pull back but we are not sure if the pull back will test the previous low (which is 10/10 near 83.58 on the SPY) but it could. There is support at the 90 level on the SPY and that may hold and we will have to see what happens at that point. The next retracement down on the SPX should present itself for a good intermediate term bullish signal of which the next rally phase could last into March 2009. There is a gap unfilled from 10/6 near 107 that is also a 50% retracement of the decline that started in late August. The 107 on the SPY should provide plenty of resistance and our upside target.

Above is the Commitment of Traders (COT) for gold updated to October 28 close which is the most current report. The Small Spec and Commercials are back in the area where the last bottom in gold formed which was mid September. Therefore there appears be a double bottom forming on physical gold. A similar pattern formed back in mid 2007 (see chart) and gold rallied strongly for six months into the March 2008 high. The COT report suggests the physical gold rally may be starting soon.

The above chart is courtesy of www.etfinvestmentoutlook.com. The GDX McClellan Oscillator has turned up and a bullish sign for that index and implies the bullish run has started. The Oscillator reached over +100 and is bullish for the intermediate term but implies an exhaustion for the short term where the market can start a consolidation. Lately GDX has been falling the lead of the SPX and the SPX is also due for a pull back here and therefore both market may pull back for short term. The COT report remains solidly bullish for gold for the intermediate term and should help GDX on its next rally phase. We will see how the potential pull back materializes and may add a couple of gold issues and will take a look at GDX. Because of the Gold to Silver ratio, gold stocks should outperform sliver stocks, but both will go higher intermediate term. 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. Holding CDE (average long at 2.77 (doubled our position on 9/12/08 at 1.46). 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.