SPX Monitoring purposes; Sold long 8/9/21 at 4432.35=gain .466%; long 7/23/21 SPX 4411.79 (SPX)

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

Long Term SPX monitor purposes; Neutral

This week is the week before option expiration week and the week where whipsaws are common.  The rally to new highs the last couple of days was accompanied on decreasing volume and a bearish sign.  The VIX was higher the last three days along with a minor new high in SPY.  Both VIX and SPY being higher is a bearish sign.  The decline into the mid July low retraced 61.8% of the previous rally and another bearish sign.  Momentum is still up but there are bearish signs presents. Market seems to running out of steam.  Sold long SPX on 8/9/21 for a gain of .466% and back to neutral for now (SPY, VIX).   

A “Zweig Breath Thrust” is when advancing issues fall below 40% of total issues then rally to 60% of Total issues within 10 days.  At the July low the Advancing issues did fall below 40% of total issues but the ensuing rally did not produce a surge of advancing issues above 60% of total issues within 10 day nor in the last 20 days.  This lack of strength to the upside suggests the next step in the market may be a consolidation.  We pointed out the previous “Zweig Breadth Thrust” with blue arrows.  

Yesterday we said, “It feels like the gold market is crashing to new lows, but it not.  We don’t have the current sentiment readings for gold but would say they are in or at bullish levels.  You have seen this chart before which is the monthly HUI index (HUI).  HUI had a major breakout above 250 back in early 2020 and the 250 now becomes major support. 

The 250 HUI range was tested in early 2021 and its aback again testing that major support area. August 2020 marked a high for HUI and anniversary of previous high (or lows) can mark reversals again, so this august should be an important date for a reversal.

Panic needs to form for a bottom in the market to form and more the panic the larger the rally thereafter. We don’t have it shown, but a “Selling Climax” formed on Friday for GDX and there was a huge “Selling Climax” on June 17.  “Selling Climaxes” are a form of panic.  Market is not breaking down here but rather a base is being formed for the next rally to begin from.  Hui has support near 250 and panic is present in the form of “Selling Climaxes” along with an anniversary of a previous high. 

We still expect there will be a rotation out of QQQ (NDX) into some degree into gold stocks.” A client sent me the sentiment readings and DSI reported 8% for Gold on Monday and Optix at 6% both below 10% and where significant lows have formed in the past. Bottoms form on panic and panic is present (QQQ, NDX).