The All New Market Analysis – Apr 4th, 2018

SPX Monitoring purposes; Long SPX on 3/22/18 at 2643.69.
Monitoring purposes GOLD: Covered short GDX on 3/21/18 at 21.86 = gain .73%; Short on 3/6/18 at 22.02.
Long Term Trend SPX monitor purposes: Long SPX 3/14/18 at 2749.48

We have been showing the Total, Index and Equity Put/Call ratio sentiment indicators over the last several days.  Above chart is another sentiment indicator from CNN Money which is the Fear and Greed Index.  The Fear and Greed Index is updated several times during the day and early today it came in at 7 (extreme fear).  The last update came at 4:03 Eastern time with a reading of 9 and still in extreme fear territory.  The Fear and Greed Index is a contrarian indicator suggesting a bottom is near and supports the Put/Call ratios readings.  Long SPX on 3/22/18 at 2643.69.

Yesterday’s low tested its previous low on equal volume suggesting yesterday’s low needs to be tested on lighter volume to complete the bottom process.  Market will do what it wants but the test of a previous low on lighter volume for a bottom to complete has been a reliable process in the past.   However if the market does go up from here with out a test of yesterday low most likely will find resistance at the 270 SPY gap level and then market may come back down and test yesterday low.  However if market does test yesterday’s low first in the coming days, then there is no need to stop at the 270 gap level and market may head back to its previous high near 280 range.  Picture remains bullish but test or no test of yesterday’s low first is the question, but in either case market will head to 270 gap level at a minimum.

The top window is the weekly GDX chart. The Bollinger bands have started to pinch over the last couple of month suggesting a large move is coming.  Looking back at the January 2016 bottom in GDX, both the weekly Advance/Decline and Up Down volume indicators showed a positive divergence where GDX tested it previous lows and A/D and Up Down Volume saw higher lows.  More or less GDX has moved sideways since December and Advance/Decline has made higher lows (bullish) but Up Down Volume has made lower lows (bearish).  Ideally to set up a bullish condition, one would like to see Up Down Volume produce a positive divergence which would take more time.   The condition appears not set for an extended move yet for GDX even though the Bollinger bands are pinching. Could take another month or longer; patience is needed.