Technical Turn May Be Close

The potential “Three Drives to Top” on the QQQ is still a possibility. Last Friday the TICKQ (Nasdaq Tick) closed at +1017, which represents short-term exhaustion. Also a surge in volume materialized on December 13, which also represents short-term exhaustion. The Santa Claus rally started last Friday and ends January 4 and if it turns out to be red, then January is also red (going back 20 years). The McClellan Oscillator closed at plus 50.27 and still above “0”. If McClellan Oscillator falls below “0”, a sell signal could develop. Neutral for now.

The SPY has been up the last three days in a row and the VIX also has been up three days in a row. Normally the VIX trades opposite of the SPY and when both rally and fall together, it can be a “Heads up” that a turn in the market is close. However, as long as the NYSE McClellan Oscillator stays above “0”, the market is considered in an uptrend. Today the McClellan Oscillator closed at +50.27. Sold our long SPX position at 2253.28 for a gain of 2.48% on 12/15/16; Long SPX on 11/30/16 at 2198.81.

The top window is the Up Down Volume %/ Advance/Decline % ratio. When this ratio reached below .85 (current reading .80) GDX was near an exhaustion low (identified by red vertical lines). The bottom window is the Up Down Volume percent. This indicator has been moving up since October while GDX was moving down and a positive divergence. A close above “0” on this indicator will be a positive for this market (Friday’s close -5.07). Next window up is the Advance/Decline Percent and this indicator also has been moving up since October and a positive divergence. A close above “0” on this indicator will be a positive for the market (Friday’s close –3.76) We are expecting a bullish outcome soon with these two indicators closing above “0” and momentum on GDX to turn up by a close above it 36 moving average. Still neutral for now.