The All New Market Analysis – 10/16/19

SPX Monitoring purposes; Flat.

Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96.

Long Term Trend SPX monitor purposes; Long SPX on 10/14/19 at 2966.15.

Above is the chart of the VIX of the VIX (VVIX).  The VVIX trades opposite of the SPY.  Today the SPY was near up 1% of the VVIX was nearly unchanged and a short term divergence.  SPY gapped up Friday and with this divergence may mean Friday’s gap may be tested before heading higher.  Intermediate term trend appears up but a short term pull back is possible. Long Term Trend SPX monitor purposes; Long SPX on 10/14/19 at 2966.15.

Today’s rally tested last Friday’s high on less than half the volume.  A test of a previous high on light volume is a bearish sign and suggests the previous high has resistance.  To go a step further; a test of a previous high on 50% lighter volume compared to a test 10% lighter volume, the 50% lighter volume test shows much more weakness as volume is energy and less energy means less force to push through the previous high. SPY appears to be stalling here for a test of Friday’s gap.

In October 10 report, we said, “Going into the early September high a pattern called “Three Drive to Top” formed. This pattern can be identified when the second decline off the second top retraces at least 61.8%, which this one did. Market then rallies to a third top. Form there third top market usually retraces back to where pattern began. In this case a pull back to 26.00 level was its target.”  Since the beginning of September, GDX is now drawing a “Three Drives to Bottom pattern”.  Same setup but in reverse, this pattern can be identified when the second rally off the second bottom retraces at least 61.8%, which this one did. Market then declines to a third bottom. Form the third bottom market usually retraces back to where pattern began (in this case a rally to 30.00 range).  Since weekly and monthly chart remain bullish, we would expect GDX to continue it rally higher and possible to break to new highs.  Long GDX on 1/29/19 at 21.97.