SPX, Gold, GDX Technicals: 01-17-18

• SPX Monitoring purposes; Sold long SPX 1/10/18 at 2748.22=gain 2.45%. Long on 12/27/17 & 2682.62.
• Monitoring purposes Gold: Long GDX (NYSE:GDX) on 1/12/18 at 24.01
• Long-term Trend monitor purposes: Neutral.

SPDR S&P 500

Above is the SPY (NYSE:SPY) chart going back 1 ½ years with its RSI. It’s uncommon for the RSI to reach 80 and when it does the market either stalls and flips sideways or declines. Friday the RSI closed at 84 and the highest level in 20 years. On Thursday’s commentary, we said, “We have circle in red the previous times the RSI closed >80. Monday is Martin Luther King Jr. holiday and markets are closed. It’s common for a market to reverse course around holiday periods; for this case the holiday could mark a high. There are divergences here and market had good run and due for a consolidation.” After the consolidation runs in course, the trin and tick should produce panic and generate bullish signal. Sold SPX on 1/10/18 at 2748.22; gain 2.45%; Long SPX on 12/27/17 at 2682.62.

NYSE Advance-Decline Index

The bottom window is the NYSE Up Volume indicator. Readings above +750 have produced short term highs on the SPX. The closing high of +669.04 came last Thursday just 80 points shy of the bearish level. Today the market gap higher and closed below last Friday’s high suggesting momentum has stalled. Today’s volume was high and most high volume highs are tested at some point and keep the uptrend intact. What appears developing in the coming days is a sideways consolidation. At the end of the consolidation, panic should form in the ticks and trin and generate another bullish signal.

Gold Miners

The top window is the Bullish Percent index for the Gold Miners index. The bullish percent index measures the stocks in the Gold Miners index that are on Point and Figure buy signals. Since mid December this index has risen from 21% stocks on buy signals to near 36% on buy signals showing strength increasing. Next window down is GDX. GDX is on a buy signal and next resistance the previous high near 25.50 range. Normally on a test the third time the market breaks through and therefore we don’t believe the 25.50 range will be much of a resistance. The next window down is the GDX/GLD ratio which has broken through its downtrend line from early 2017 showing strength. We like for this ratio to outperforming GDX for a bullish case, and right now its keeping pace which is neutral, it may outperform later, Long GDX on 1/12/18 at 24.01. New Book release "The Secret Science of Price and Volume" by Timothy Ord.