The All New Market Analysis – Apr 11th, 2018

SPX Monitoring purposes; neutral
Monitoring purposes GOLD: Neutral.
Long Term Trend SPX monitor purposes: Long SPX 3/14/18 at 2749.48.

Today’s rally tested the previous high volume day of April 6 on about ½ the volume and suggests April 6 high has resistance and market may fall back.  If a market can’t take out previous high on increased volume, it will reverse and take out the previous low which is also April 6. The pattern forming over the last couple of weeks could be a Head and Shoulders bottom where the Head is the April 2 low.  If market does pull back and tests April 6 low on lighter volume would imply support and could finish the “Right Shoulder”.  This potential Head and Shoulders bottom has a measured target to the March high. We are neutral for now.  This is also the week before Option Expiration week which whipsaws are common and a week to be careful.

Another possible pattern is the “Three Drives to Top”.  Both Monday April 2 and Friday April 6 had high volume and most high volume lows are tested (see chart above).  If the high volume low is tested on at least 10% lighter volume than that is a bullish sign and suggests the market will reverse back up.  If the high volume low is tested on equal or higher volume, than market has energy to continue lower.  To help identify the next low, panic should form and we measure panic with the Ticks and Trin readings.  This potential “Three Drives to Bottom” has a target to where the pattern began which is near the 270 SPY gap level and is not as strong as the Head and Shoulders bottom on page one which has target to previous high.  There is also a bullish candlestick pattern called a “Bullish Engulfing” formed last Wednesday.  The more days it engulfs the stronger the signal and this pattern engulfed four days and a strong signal. Might add that most “Bullish Engulfing” pattern lows are tested before the rally begins.   A signal for a low is near and the next rally could test gap level if not the March highs.

The top window is the weekly GDX chart.  Notice that the Weekly Bollinger Bands are pinching suggesting a large move is coming.  GDX is also holding near the 50% retracement level (from the 2016 low) and implies GDX is at the mid point of the move up giving a target near 42.00.  Next widow down is the Weekly GDX/GLD ratio with pinching Bollinger bands as well suggesting large move coming. The GDX/GLD ratio has retrace near its 61.8% level and has a declining mid Bollinger Band which shows modest weakness.  Normally GDX/GLD ratio leads the way for GDX and right now GDX/GLD ratio is weaker than GDX and not a bullish short term sign.  Next window down is the weekly Cumulative Advance/Decline which is holding above the 38.2% retracement level in a strong position and a positive sign for the market.  Its Bollinger bands are also pinching suggesting the sideways pattern that has been going on since last July may be ending soon. This index is bullish.  Next window down is the weekly Cumulative Up Down Volume which has retraced 50% of its move from the December 2016 low and a modestly bullish sign.  Its Bollinger Band is also pinching suggest a large move is coming.  The weekly cumulative Advance/Decline and Up Down Volume are bullish and the GDX/GLD ratio is modestly bearish suggesting a modest pull back short term is possible before a strong rise begins.