The All New Market Analysis – December 7th, 2018

SPX Monitoring purposes; Long SPX on 10/22/18 at 2755.88.
Monitoring purposes GOLD: sold 11/27/18 at 18.88=gain .075%; Long GDX at 18.72 on 8/17/18
Long Term Trend SPX monitor purposes;  Long SPX on 10-19-18 at 2767.78

The American Association of Individual investor’s bull bear ratio (AAII) has reached levels where intermediate term lows have formed.  The .75 level of the 3 period moving average (AAII) has been hit suggesting market are at an intermediate term low.  The Trin closed at 2.76 and Ticks at -357 producing panic readings suggesting a bottom will form today to as late as two days later which is Friday.  With the McClellan Oscillator rally +500 points to early November suggesting an initiation of an up-move, after the current pull back, we expect another rally higher.

On Yesterday’s report we said, “If market does pull back in the coming days, it could form a “Right Shoulder” of a “Double Head” Head and Shoulders bottom.   This potential Head and Shoulders bottom would have an upside target near 299 on the SPY (gain near the 300 SPY) (3000 on the SPX).   Today’s rally tested the gap on November 9 on higher volume and suggests at some point the gap of November 9 will be exceeded.”   Today the Trin closed at 2.76 and Ticks at -357 suggesting a bottom will form today to as late as two days later (Friday). Today’s volume jumped 30% for the days before suggesting a “Selling Climax”.  The 3 day average of the TRIN reached above 1.40 (bottom window) and is where bottom have formed.  Market needs panic to form to get a strong rally to materialize and panic is present.  Its possible to see 3000 on the SPX before year is out. From three weeks ago Monday’s report, “Since 1950 the change from October low through year-end average=10.7% gain (with no losses) during mid term elections years (@theonedave). The 10.7% average from the October low would give a target near 289 on the SPY (2890 SPX).”

The above is the weekly charts for “Bullish Percent index for Gold Miners”, GDX, GDX/GLD ratio and GLD (EFT for Gold, bottom window).   Again this the weekly charts.  What these charts have in common is the weekly Bollinger bands are pinching in all cases suggesting a large move is coming.   Since these charts are on the weekly timeframe, several more weeks of “pinching” is possible before the large move is realized.  The last time that the weekly Bollinger band pinched to this degree on GDX and GDX/GLD ratio came back at the 2015 bottom.  Both index had a “Head fake’ to the downside before reversing higher.  We don’t have a signal here, but one could develop in the coming weeks. Last Friday’s Gold COT report reported that commercials are 16K short and remain on the bullish side for gold. We sold our long GDX position  (11/27/18) at 18.88 for a .075% gain; Long GDX at 18.72 on 8/17/18.  We will wait for the next bullish setup.