SPX Monitoring purposes; Sold long SPX 5/23/17 at 2398.42 = +1.76%; Long SPX 5/17/17 at 2357.03.
Monitoring purposes GOLD: Short GDX on 5/22/17 at 23.20.
Long Term Trend monitor purposes: Neutral.
Friday the McClellan Oscillator closed at +39.26 and today -9 and below “0” and a bearish sign. Normally the VIX moves opposite of the SPY. Today the SPY dropped .12% and VIX rose 5.4% suggesting weakness in the SPY is coming. However we don’t think there is a large down move beginning here but one could come later. The SPY may back and fill for several more days complete a top pattern. Page two helps to explain what may develop next. We will be patience and wait for the next setup.
So far it looks like the “Three Drives to Top” pattern that we have been discussing in our reports is still in play. A developing “Three Drives to Top” pattern that develops “Three Drives to top” within the developing “Three Drives to Top” pattern adds credit the pattern. At the second top back in late April and early May a “Three Drives to Top” formed. On this “Three Drives to top” the market retraced 61.8% of the previous rally on increased volume suggests this larger pattern is a “Three Drives to Top” pattern. The “third” top of this pattern may also break down into a “Three Drives to Top” (just like top two did). Once this large potential “Three Drives to Top” is completed a pull back to 2300 SPX range is possible.
If GDX was ready to begin a rally then Up down Volume indicator (bottom window) and Advance/Decline indicator (second window up from bottom) should be showing signs of strength and rising and that is not what happening here. The last several days both indicators are trending sideways along with GDX. With GDX modestly down today, when UP Down Volume % and Advance/Decline % updates later tonight, these two indicators may show weakness. Still expect GDX generally move lower in the coming weeks. There is a possibility that GDX may test the December low near 19.00. Short GDX on 5/22/17 at 23.20.
Tim Ord,
Editor
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