Market Sending Bearish Signals

turned on flat screen monitor

SPX Monitoring purposes; Sold long SPX on 12/21/20 at 3694.90 = gain 1.3%; long 12/14/20 at 3647.49 (SPX).

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

Long Term SPX monitor purposes; sold long SPX on 1/15/21 at 3768.25= gain 10.80%; Long SPX on 10/26/20 at 3400.97.

Could today be “Turnaround Tuesday”?  Today the SPY hit a new high and volume shrank over 30% suggesting attempted breakout didn’t have energy to push higher and a bearish sign. Last Friday the tick closed at +608 and suggested upside exhaustion (SPY).  The VIX has been rising the last three days and another bearish sign (VIX).   A “Selling Climax” occurred on 1/15 and most “Selling Climax” are tested and could be a downside target which is near the 374 range.  A bullish signal could develop near the 374 SPY level if panic forms in the tick and trin closes. 

Today the SPY touched a new high and volume dropped over 30%; showing there where not energy to push higher. The last three days the SPX/TLT ratio declined and SPX has made higher highs, producing a divergence. January 8 the RSI of the SPX/TLT ratio reached above 70, suggesting short term exhaustion to the rally.  Pull back to the “Selling Climax” day of January 15 near 374 SPY is possible.  Bigger trend is up, short term trend sideways to down.  Bullish setup could form if panic in the tick and trin develop near the 374 SPY range. 

The middle window is the monthly GDX/GLD ratio. In gold bull markets, gold stocks outperform gold (GLD), and when that happens this ratio rises.  In June of last year the monthly GDX/GLD ratio broke out above the down trend line going back to the 2007 high; triggering a long term bull sign.  The monthly GDX/GLD ratio has back tested the breakout line and appears to be finding support.  The monthly GDX/GLD ratio has been trading in a tight range since last June and this tight range may be near and end.   The next upside resistance in this ratio is the .25 range which is a trend line that dates back to 2008 and when broke will be another longer term bullish sign.  On the left side of the chart is the “price buy volume” indicator.  This indicator shows at what price had the most volume.  Notice that volume is very light above .25 and where price has very little resistance and where prices can rally easily.  The GDX/GLD price above .25 is where gold stocks could rally the strongest and an event worth waiting for.  The best part of the gold stock rally is not far off and could start when the monthly GDX/GLD ratio closes above .25. Long GDX on 10/9/20 at 40.78.

Disclaimer: Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future ...

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