The bottom window is the McClellan Oscillator which reached minus 266.53 last Thursday and is about as low as it gets and did mark a low. The FOMC meeting is Tuesday and Wednesday and may mark a short term turning point in the market. High volume days are usually tested and March 1 and March 9 both had high volume and March 1 marked the highest volume which means it has more resistance when tested. This week is option expiration week which has a 67% of being higher and next week has a 70% being lower. There are two scenarios in play during the FOMC meeting; If March 9 low is tested on lighter volume a bullish setup is feasible for a test of the March 1 high which has the strongest volume and most likely will end up with a sell signal near the 240 SPY range. If market just pushes to the March 1 high, and volume is less, then a sell signal may develop again at the March 1 high. The FOMC meeting appears will produce a rally to test the March 1, we don’t know if the March 9 low will be tested first.
Last Tuesday the Equity put/call ratio came in at .54. Over the last couple of years equity put/call ratio .53 and lower predict a lower market over the next 3-5 days with an average loss of 1%. Tomorrow marks the 5th day form the .54 Equity put/call ratio day. Tomorrow and Wednesday is the FOMC meeting could mark a turning point. What could develop is a low Tuesday or Wednesday then a pop to test March 1 high. To get the potential short term bullish setup, a downtick close less than minus 300 and a TRIN close above 1.30 will be needed. Being patience for now.
Last week, the RSI for GDX reached 29.16 and suggested GDX is near a short term low. Since then, market has bounced some. Bullish GDX market produces an RSI above 50 and bearish below 50. With the RSI <50, the first rally can be expected to be just a minor retracement and not the one to catch for longer term. The bottom window is the Up down Volume percent has which is showing a negative divergence along with Advance/Decline percent just above it. These two indicators suggest the bounce in GDX most likely will not be lasting because of the negative divergence. Most likely a trading range will be starting short term that could last several weeks. We are still bullish longer term but patience will be needed for the next bullish trade for GDX to setup. The timing for the next buy signal could come around Tax time near April 15 and possible near current prices on GDX. The Timer Digest has us ranked #2 in performance for gold over the last 12 months. Sold GDX at 24.33 on 2/22/17 = gain 20.15%; Long GDX on 12/28/16 at 20.25.
