The All New Market Analysis – 7/03/2019

SPX Monitoring purposes; Long SPX on 6/25/19 at 2917.38.

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

Long Term Trend SPX monitor purposes; Long Term long SPX on 6-26-19 at 2913.78.

What we said yesterday is still valid. “The above chart is the VIX. In general the VIX moves opposite of the SPY and when it does move opposite the prevailing trends remain intact.  Today the VIX closed at a new short term low and the SPY closed at a new short term high and keeps the uptrend in the SPY intact.  The second window up from the bottom is the SPY/VIX ratio.  When this ratio is rising (like now), it shows that SPY is outperforming the VIX and a bullish sign and when this ratio is declining, it’s a bearish sign.  The July 4 holiday, Seasonality comes into play.  The Fourth of July timeframe has a bullish bias going into this holiday and bearish when leaving.”  Today also marks the fourth day up in a row and suggests market will be higher within 5 days with an average gain over 1%.

The top window is the 5 minute moving average tick.  Reading above “0” are bullish and below bearish.  Yesterday this tick indicator closed below “0” and was a bearish sign.  However the 5 minute tick indicator can remain negative for a while as the market is rallying, but does suggests a top is not far off.  Since it has now closed back above “0” the bearish sign is negated.  The bottom window is the Cumulative tick which also rises and falls with the SPY and yesterday it was declining and a bearish sign.   It has now turned back up and back to being bullish.   The short term picture is in bullish mode for the SPY (SPX). (Long SPX on 6/25/19 at 2917.38.

We have shown this chart in the past. This is the monthly chart of XAU/Gold ratio.  Intermediate term tops have formed in the XAU when the Slow Stochastic for the monthly XAU/Gold ratio reached above 80 (noted with blue circles).  Why this chart is important is that every major consolidation in the XAU that lasted six months or longer produced a monthly Slow Stochastic near 80 or higher on the XAU/Gold ratio.  The XAU has consolidated since the beginning of 2016; two and a half years ago.  With this reasoning, one would expect an intermediate term rally in the XAU to continue until the monthly Slow Stochastic for the XAU/Gold ratio reaches above 80.  Going back to the chart above, it took about one year in time (on average) for the monthly Slow Stochastic on the XAU/Gold ratio to reach 80.  The rally in 2016 took 7 months.  In that regard the current rally in the XAU is in the beginning stages.   In all but one case (going back to 1984) the Slow Stochastic reaching +80 marked an important high. The one exception came in 1994 where market wiggled higher for a few more weeks.   Long GDX on 1/29/19 at 21.97.