The All New Market Analysis, Feb 7th, 2018

SPX Monitoring purposes; Neutral
Monitoring purposes GOLD: Neutral.
Long Term Trend monitor purposes: Neutral.

Yesterday we said, “The Trin closed today at 3.52 and Friday at 1.50 (adds to 5.02); two days readings that add up to five normally appear at short term lows in the SPX.”  A bottom is forming here but a test of today’s low is likely in the coming days.  High volume lows are usually tested and if tested on lighter volume would lead to a high probability long trade.  If market stayed below yesterday’s low close today, most likely we would have been long today with an upside target near the 50 day average which is near 271 on the SPY (today’s close was 269.06).  Sine SPY is nearly there, there is not a lot of upside form today’s close.  Also it not common for lows to form on the week before option expiration week.  A possible test of today’s close could setup a bullish signal in the coming days.

The chart above is the VXV/VIX ratio (3 month Volatility/One month Volatility).  When this ratio reaches .80 or lowers the market is usually near a bottom.  Yesterday’s reading came in at .75.  The rally off that low finds resistance near the 50 day average with in the current time frames come in near 271 and market is almost there. The chart above is two bottoms that formed in March 2010 and April 2011 and both bottoms had retest of the low (several times) before heading higher. A retest of yesterday’s low is possible later this week or early next week that could setup a bullish signal.

Yesterday we said, “It is said that GDX/GLD ratio leads the way for GDX.  Today GDX/GLD ratio tested its December low and suggests at some point GDX will test its December low, which comes in near 21.00 level.”  For very short term GDX may attempt to bounce as market has been down three days in a row and short term over sold.  Resistance lies from 23.00 to 23.50 and an area where a bearish setup could materialize.  Both Advance/Decline and Up Down Volume indicators (bottom two windows) are below “0” and in bearish levels, RSI <50 and also bearish.  Short term trend is down, but bounce is possible to short term resistance where a sell signal could develop.