tim_ord's blog

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 Rydex Cash flow Ratio Measures the flow of cash into and out of the bullish and bearish Rydex funds.   Over the last 12 months, short term highs have formed in the SPX when the Rydex Cash Flow ratio reached near .90 or lower. Yesterday’s close came in at .90 and this reading is a short term bearish sign. This week is one of the most light volume weeks of the year and the volume in the market right now doesn’t have enough energy to push it up or down. We are staying neutral for now. We sold our SPX position on 8/7 close at 1266.07 for a 1/2% gain and are now flat.

The SPY has built a trading range for two weeks and implies when the break out comes a nice run in the market should materialize. Today rally was decent but volume is less then the previous high recorded on 7/30 and shows that today’s rally was not as strong as the 7/30 rally and a short term negative on the market. Also the closing tick on the NYSE came in at +897. Closing tick readings exceeding +900 can turn the market down in a day or so. The last time the tick closing where this high came on 7/30 with a closing tick reading of +1065 and that tick closing turned the market down for three days.   We are bullish here but there could be some more backing and filling before the market jumps the 129 area.   If short term the SPY does jump the 129 range with big volume and wide price spread then the condition would give an upside target to 134 range on SPY which equates to 1340 on the SPX.  We are long the SPX at 1260.32.

Above is a price comparison chart of the nine main sectors in the market along with the S&P 500 dating back to early May. The sectors that hold up the best (decline the least) in a market decline will usually outperform on the next rally phase.   The sectors that held up the best going into the mid July low were Gold & Silver (XAU), Biotechs (IBB) and Oil Services (OSX). The sectors that got hit the hardest on the last decline where Brokers (XBD) and Banking (RKH). We all ready own issues in the Gold and Silver index and will keep these issues. For short term there could be a minor consolidation. We checked the ISEE put call ratio index before the close and this ratio stood at 1.52.   The 1.52 ratio shows to much call buying for short ter