Last week trading on less volume was below last week’s low but then closed above last week’s low. It states, “If a market fails to clear the previous low on higher volume, it will reverse and attempt to clear the previous high.” In the current situation, this would give a target for the week of December 16, a high close 410 on the SPY. If the December 16 weekly high is tested on higher volume then it would move the target to the next higher high which is the August high near 430. Also note that the SPY found support near the 50% retracement level from the rally to the upside in early October. This condition suggests that the 410 SPY level could be breached, opening the door to the 430 SPY level, the August high.
If the SPY has been down for four to six days in a row, the market may make a lower low before bouncing back up (indicated on the chart). SPY has been hovering around the November 10 gap since December 19. The November 10 gap was tested at lower volume, suggesting the gap has support. The weekly chart of SPY (above) is trending bullish as testing the last week of the week before the lows was on lesser volume suggesting support and giving a target back to the 410 SPY range. Hold the SPX long for now.
Last Thursday we said that both the weekly 18-day moving averages of the up-down volume and the bollinger bands of the advance/decline indicators® pinching, suggesting that a large movement is approaching. The blue and red arrows mark earlier times when the Bollinger Bands pinched these indicators, which happened right before big runs in GDX. The lower window is the Bollinger range; When it’s low, the Bollinger Bands are in a tight range, and when it’s high, the bands are wide apart. When the Bollinger Band is low and rising, large moves can happen. The Bollinger Bands have been tight for several months and are now beginning to appear on these indicators. These indicators are rising, suggesting that the movement will be to the upside. If the indicators recover, so will GDX.
Tim Ord,
editor
www.ord-oracle.com. Timothy Ord’s The Secret Science of Price and Volume book release, buy at www.amazon.com.
Signals are provided for general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future performance. Opinions are based on historical research and data believed to be reliable; There is no guarantee that the results will be profitable. No responsibility for errors or omissions. I am allowed to invest in the vehicles mentioned above.
