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Stocks And Gold Ahead Of Brexit

June 22, 2016

TICK/TRIN Ratio

The middle window is the TICK/TRIN ratio with a 5-period moving average. This ratio hasn’t said much this year. However, it has now reached oversold levels suggesting there is support here at least short-term. This indicator suggests the Gap near 210 on the (NYSE:SPY) will be tested and could even push higher than that. It appears the market will stay firm into the Brexit vote on Thursday.

NYSE Volume

The top window is the McClellan Oscillator, which closed above “0” today and a short-term bullish sign. The vote on the Brexit is Thursday (June 23^rd) -- and market could hold or work higher until then. A gap formed on June 10 -- and so far that gap has not been touched…consequently is a likely upside target. If the gap is tested on lighter volume than that, it will imply resistance. But if tested on higher volume, it suggests the market may move through the gap resistance. Both the Up volume/Down volume, Moving Average and Advancing/Declining Moving average remain on a bullish crossover and keeps the short-term trend bullish for now. If this larger pattern is a “Three Drive to Top”, it has a downside target near 202 on the SPY.

Gold And Silver

Below is the monthly XAU chart from 2005 to the present. The top window is the monthly RSI for the XAU. In bull markets, the XAU stays above 50 and in bear markets, it stays below 50. When the market transition from bearish to bullish, the RSI will surge and hold above the 50 level -- which it did in April. The monthly XAU jumped above the late 2014 and early 2015 high near 80 and that area should not act as support on pull backs. The blue vertical lines are the 8-year cycle low, which the next one up is in September. It appears the major low occurred in January of this year -- and the 8-year cycle low due in September most likely will be a higher low. XAU has had a good run from the January low -- and what may come next is a trading range that could last into the 8-year cycle low due in September. The 8-year cycle can arrive early or late by a couple of months…and not be “off the mark” as this is such a large time frame.

The Brexit vote on Thursday could produce short-term volatility; we will set on our hands for now.

Tim Ord has been a respected figure in the financial industry for more than 25 years. He's a University of Nebraska graduate (1973) and a BS in Mathematics with a teaching degree. He has been licensed with a Series 7, 63, 4 and 24 Brokerage Licenses. Ord has also held the office of vice president and Option principal. He is frequently in the Top 10 Timers in "Timer Digest. Tim Ord writes and publishes the much respected market letter "The Ord Oracle" ( www.ord-oracle.com ) that he founded in 1990. The Ord Oracle market letter is emailed four days a week, Monday through Thursday and covers the S&P500, NASDAQ and the gold market. And in 2008 Mr. Ord combined his knowledge and experience authoring the book entitled, “The Secret Science of Price and Volume,” published by Wiley Trading.