The Ord Oracle - 2/24/2009
We did think a low is being made (or has been made) on the SPY (and SPX), however, we are being careful in that Obama’s speech tonight could put volatility in the market tomorrow. The RSI did hit 30 when the Stochastics was below 20 and a bullish condition. The NYSE tick index closed yesterday at minus 971 is also bullish but normally on turning points there are two days of extreme downtick readings. So there is a possibility another extreme downtick reading day is coming to complete a bullish tick reading setup. Today’s close of +1127 ticks is an exhaustion up move and is a short term bearish sign and suggests there is a pull back coming short term and if this potential short term pull back produces a bullish downtick reading we may get our tick signal.
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It would have been nice to see the SPY touch (test) yesterday’s low or even the 11/21 low on lighter volume to “Prove the Point” and help give a stronger signal. These tests may still happen (because of today’s +1127 tick close) in the next day or two and create (at least for us) a stronger bullish signal. As it stands now the test of the 11/21 low is still a possibility. We have evidence that a bottom was hit yesterday and if we test yesterday’s low (or 11/21 low) on lighter volume with bullish tick readings then we would have a completed bullish signal. Either we get the tests and complete the signal or we pass on the current setup. We are staying flat the SPX. Long XLF at 9.50 on 1/30/09.
On 4/2, we Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.
Above we have referenced when the McClellan Oscillator reached -300 or lower. Over the last 3 years this has happen 6 times and 5 of those times the market rallied. The one time the market did not rally with a -300 Oscillator reading came in July 2007 marked with a blue arrow. Yesterday’s Oscillator reading came in at -367 and in extreme oversold level and in an area where bottoms normally form in the market. Today the market did rally and the Advance/Decline line was strong and gives credit that the market is at or near a low. Our leader speaks tonight and could put some short term gyration in the market but all in all the market is at a low, least for the short term.
A Head and Shoulders bottom has been confirmed with a Sign of Strength through the Neckline. On 1/23, GDX rallied through the Neckline with a surge in volume and completed the Sign of Strength through the Neckline and confirmed the Head and Shoulders bottom. The Neckline should hold as support on any retracement in GDX. The Neckline comes in near the 32 range and GDX is heading to the support level now. Also notice since mid January that GDX has been rallying and volume has been increasing which shows this rally is increasing its strength. This Head and Shoulders pattern has an upside target to the 54 range which is the old 2008 highs. We remain bullish and the 32 range may be a good place to add to gold stock positions.
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.
