Short Term Exhaustion

• SPX Monitoring purposes; Neutral
• Monitoring purposes GOLD: Long GDX on 6/8/20 at 32.79.
• Long Term Trend SPX monitor purposes; Short SPX 5/13/20 at 2820.

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Today the SPY was up and the VIX was also up which is a divergence. The SPY is also running into the February gap which is a natural resistance level. Friday’s Volume increased near 50% from the days before which usually leads to short term exhaustion. For very short term, market may be heading to a consolidation. NYSE did close above +600 suggesting a bullish condition longer term. Sentiment is way to bullish short term which also suggest consolidation. Our thinking is market may rest for the next 30 days before heading higher. Being patience for now.  

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fat-pitch.blogspot.com pointed out that when SPX is up three weeks in a row (vertical lines) the market is weekly higher 85% of the time. Add to that; when the three-week Equity put/call reaches .52 (blue vertical lines) the upside is usually limited and a worthwhile correction forms in around a month. There is also a weekly gap near 325 on the SPY and the market is testing that level now. Being patience for now.    

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Last Thursday, we said, “Above is the weekly Inflation/Deflation ratio dating back to 2001. Inflation/Deflation weekly RSI reading near 70 suggests short term exhaustion which was reached a couple of weeks ago (reason we sold our GDX position) and usually do not mark the final high. The market usually corrects after the RSI 70 reading and finds support when the weekly RSI reaches near 50. Is common for the gold market to bottom or top around full moons and the next full moon comes Friday, June 5. Friday is also the end of the week and the next reading for the weekly RSI. There may be another really in GDX that may hit a new short term high that could lead to a longer consolidation period. Support comes in near 31.00 range and an ideal place for a bullish setup.”Friday’sRSI close came in at 48.54 right in the target area. The FOMC is Tuesday and Wednesday which also may affect the markets. Previously when the weekly RSI reached above 70 then pull back to 50 range, GDX went up above its previous which was 37.21.long GDX on 6/8/20 at 32.79.