Before The Storm

SPX Monitoring purposes; Covered 1/24/22 open 4356.32=7.57%; Short SPX 1/11/22 at 4713.07.

Monitoring purposes GOLD: Long GDX on 10/9/20 at 40.78.

Long Term SPX monitor purposes; Neutral

(Click on image to enlarge)

We updated this chart from yesterday. The second window up from the bottom is the VVIX/VIX ratio with a 3 period moving average. This ratio helps to define the short-term trend for the SPX. At the moment it's still trending higher suggesting the short-term trend is up. This ratio can change quickly but the message right now is still up. One possibility is that we test the down gap from last Wednesday high to Thursday’s open, which comes in near 451 on the SPY. If that potential gap test comes on lighter volume will suggest the gap has resistance and if tests come on higher volume will suggest the market can move past the gap. Staying neutral for now.

(Click on image to enlarge)

The top window is the 10 day average of the TRIN; readings above 1.30 are bullish and below .85 lean bearish. Yesterday’s close came in at .84. The horizontal lines show the times when 10 trin reached below .85. The blue horizontal lines show times the market has stalled or declined and the red lines show when it seems not to matter. This indicator suggests upside may be limited for the short term on the SPX. This week is the week before options expiration week where whips saws are common. The conclusion is that the VVIX/VIX ratio on page one suggests the market can still push modestly higher but with 10-day TRIN <.84 suggests upside is limited giving the possibility that gap test near 451 on SPY is probably the best market can do short term.

(Click on image to enlarge)

Back in January, GLD was looking like it was about to break above the Neckline of a Head and Shoulders bottom (Top window). It did not and backed away from the Neckline, As you can see it rose again back to the Neckline. The Neckline lies near 172 on GLD and is the place where a “Sign of Strength” is needed for the breaking of the Neckline to be successful. The next window down is the GDX/GLD ratio. Its also rising to a trend line (near .190) and it too would need a “Sign of Strength” to confirm a breakout above that level. The bottom window is GDX and it too is near a breakout trend line near the 32.50 range and would need a “Sign of Strength” through that level to confirm the breakout. We are watching closely to see what develops in the coming weeks. All indexes above have moved sideways since the October low and this could be the “calm” before the “Storm” (meaning markets finally break above their trend lines).