Friday, May 8, 2009

Outside Bar on SPX and Rapid Deceleration of NDX Momentum

Outside Bar on SPX and Rapid Deceleration of NDX MomentumSocialTwist Tell-a-Friend
Fari Hamzei

These two observations, ahead of the much anticipated April Non-Farm-Payroll data to be released tomorrow at 0830 EDT, call for high level of vigilance and alertness. We discussed their ramifications in detail on the Twitter tonight.

Trade Well Tomorrow.

Wednesday, May 6, 2009

The Ord Oracle on SPX and Gold

The Ord Oracle on SPX and GoldSocialTwist Tell-a-Friend
Tim Ord

Momentum is the name of the game for now and right now most momentum indicators are still moving higher (NYSE Summation index and Cumulative advance/decline line on chart above). Yesterday the SPX jumped through the 875 resistance and for now the 875 area made provide support. If the Momentum indicators don’t turn down for near term then the market may head to the January high near 940 level. We have draw a line from the 940 range which could turn into a Neckline of a Head and Shoulders bottom where the left shoulder came back at the November 08 lows. If the SPX tests the January highs on higher volume then that would be a very bullish development and give credit to the Head and Shoulders bottom pattern. A pull back still would be expect and could pull back down where the Left Shoulder bottom which is near 740 range. There is an old adage that says “Sell in May and Go away” and may hold true this year also. We will watch the Bullish Percent index, Summation index, Cumulative Advance/decline line and MACD closely for the next clues for a downturn in the market.

Above is the Venture Composite index ($CDNX). This index has around 528 small mining companies that are mostly small gold miners along with some small oil companies. This index is a gold proxy for small junior gold miners’ performance. In the middle window is the ratio between CDNX and XAU. When this ratio is rising is shows that the small gold miners (CDNX) is outperforming the big gold miners (XAU). In generals we expect this ratio to continue to rise for the longer term. What this ratio implies is that the smaller gold companies will outperform the larger gold companies in the months and possible years to come. However, we will wait to buy these issues until the pull back is complete. See next chart.

Above is GDX. We have labeled what we believe is the correct count for Elliott Wave. An Elliott Wave 5 was completed at the February high near 38. Currently GDX is performing a consolidation in the from of an ABC and GDX is about to start the next 5 count down in the “C” leg. The “C” should end near 27 which is also the bottom of Wave 4 and an Ideal place where normally consolidation end. From the 27 level, GDX should start another Elliott wave 5 count up that should not be less then the first Elliott wave 5 count up that started in October 08. The Elliott 5 count up from the 08 low traveled 22 points. Add 22 points to the next possible low near 27, would give an upside target to 47 at a minimum. A lot of times Wave 3 of larger degree (that is what the next wave up will be) is extended. Our view is that it will reach near 57. We still expect a pull back to possible 27 over the next several weeks so we will put off any new buys until then.

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