SPX Monitoring Purposes: Neutral.
Monitoring Purposes GOLD: Long GDX on 7/8/20 at 38.95.
Long Term Trend SPX Monitor Purposes: Short SPX 5/13/20 at 2820.
SPY matched its June high yesterday and VIX made a higher low compared to its June low, which is a divergence. The Bollinger Bands are starting to pinch on the VIX, which implies there is a large move coming on the SPY. This is option expiration week, which usually has a bullish bias. Yesterday, the TRIN closed at 1.51 and the TICK closed at minus 140, which is a bullish combination. Picture is not clear for the short term. Momentum is still up but divergences are present. We will wait for the picture to clear. Neutral for the short term.
Above is the Volume Momentum Oscillator, which showed a “Sign of Strength” in early June and a bullish intermediate term sign. However these “Signs of Strength” can produce short-term exhaustion moves and that may be what is developing here. Most of these “Signs of Strength” produce a “Time out to the uptrend” or even produce a pullback. This week may hold up due to option expiration week, but next week could start a pullback. Bigger picture is bullish, but the next 30 days or so could produce a consolidation.
When the weekly RSI for the Inflation/Deflation ratio reaches above 70 (marked with vertical dotted lines), XAU (GDX) is near a stalling area; however, it’s not usually at the final highs. After a stall period and the weekly RSI falling back near 50, the market again rallies and hits new higher highs. The next high in the XAU (GDX) is when the weekly Inflation/Deflation at least matches its previous high. The previous weekly Inflation/Deflation ratio high were .29 and the current reading is .24 (on the daily reading), suggesting the rally has further to go. Momentum rules everything and for now the momentum is up. We are staying long for now. Long GDX on 7/8/20 at 38.62.