- S&P 500 Monitoring purposes; Long SPX on 3/25/22 at 4543.06.
- Monitoring purposes gold: Long GDX (NYSE:GDX) on 10/9/20 at 40.78.
- Long Term SPX monitor purposes; Neutral
Next week is options expiration week, and the week before (this week), whipsaws are common. The “Whipsaw” may be in progress now.
Last Thursday, we had a 2-day TRIN that averaged 2.02. Turn your attention to the second window up from the bottom, which is the 2-day TRIN.
Two days average of 2.00 and higher (noted with red vertical lines) all have produced bottom that went on to make new short term highs. There can be tests of the 2-day TRIN lows and back and filling, but market reverses back to the upside is the norm. This time could be different, but April should be an up month.
Today, the tick closed at -604; the next day is up when the tick closes below -300.
We updated this chart which was posted in a recent report. The top window is the NYSE McClellan Summation index.
Climatic bottoms occur when the Summation index falls below -700, which is a fairly rare occurrence and happened only three times in 2016. A rebound is expected when an oversold condition below -700 occurs, which normally takes the Summation back to above +1000, usually taking around two months.
If the current situation plays out like in the past (going back to 2016), then the Summation index may reach +1000 around May 10. We did have a “Sign of Strength” in the NYSE McClellan Oscillator, which traveled from -300 (climatic) to +200 (a sign of strength) on the recent bottom. We pointed out the previous times when the Summation index fell below -700. The market appears to have enough strength to push higher into May.
The second window down from the top is the Inflation/Deflation ratio. When this ratio rises, it’s a bullish sign for gold and gold stocks and a bearish sign when declining.
Right now, this ratio is testing the May 2020 and not backing away from that high, suggesting this ratio is “eating through” supply, and once supply is exhausted, this ratio should move higher, taking gold and gold stocks with it.
The next down window is the XAU/USD (home to more of the high-tier major gold stocks). It is at its previous high and not backing away and building “Cause” (energy) to push through resistance. Notice that GDX is not at its last high (which is home to lesser tier stocks) and shows that the higher tier stocks are leading the way higher.
This happens early in the bull phase of the rally. It’s indicative of a late bull phase when the lesser-tier stocks are leading the way (meaning speculation).
The sideways consolidation in GDX and XAU has been going on for nearly a month, and time is about up for the consolidation to end and the Impulse wave to start. A clue that the impulse wave has started is when the ratio breaks to new highs.