Tim Ord Oracle 10-14-08

On-Balance Volume (OBV) Indicator Set: The Climactic Volume Indicator (CVI) measures extreme OBV movement within the context of a short-term OBV envelope for each stock in the index. The Short-Term Volume Oscillator (STVO) is a 5-day moving average of the CVI. The Volume Trend Oscillator (VTO) summarizes rising and falling OBV trends. These charts tell us if the index is overbought or oversold based upon volume in three different time frames. We used the S&P 100 (OEX) instead of SPX because the OEX chart went further back in time, going back to 1989. What VTO points out on OEX is that reading <-75 have lead to major lows in the OEX. On the chart above dating back to 1989, when VTO reached -75, which came in late 1989, the 9/11/01 low and the July 2002 low, all where at intermediate lows. Therefore this chart suggests the carnage is done on the market and we should look for a long entry point in the market. Staying flat for now.

On 4/2, we Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.

Today’s Advance/Decline line was modestly positive but not strong enough to push the McClellan Oscillator above the “0” line which in turn keeps the Summation index heading lower. When the McClellan Summation index is heading down, this condition implies the NYSE trend is still down. It does appear the Markets are turning the corner to the upside but near term there could be some back and filling before the next uptrend begins. The “9 Month Cycle Low” is due October 22 (Next Wednesday) and may be the time when the next uptrend begins. We are looking for test of yesterday’s low or Friday’s low on lighter volume and then a close above that low to signal the short term consolidation is done and the next uptrend to start. Normally after huge volatility like we had going into last Friday’s low the market will settle down and come to a lull. The decline is done; we will be looking for a buy signal over the next several days.

On last Thursday report, we said the following and think it’s worth a repeat, “Above is our Elliott Wave count from the 2000 low in XAU on the weekly timeframe. A five count up in Elliott Wave terms ended at the 3/08 high and completed Wave 1 of one degree larger. An ABC down where Leg C was extended into the current low ended Wave 2 of larger degree. Wave 3 of larger degree is starting now and Wave 3 is not shorter then Wave 1 and Wave 1 covered 170 points. Therefore, Wave 3 should go to at least 270. XAU found support at the uptrend line from the 2000 low. The Weekly RSI has been hovering around 30 for the last couple of weeks. Previous time when Weekly RSI reached the 30 range and intermediate term rally started (see chart above). Price Relative to Gold has never been as cheap now as in the last 24 years and implies gold stocks are at a bargain. There is always a bull market somewhere, and it appears the gold market bull is about to start Wave 3 up. 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 (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. For examples in how "Ord-Volume" works, visit www.ord-oracle.com.