November 12, 2008

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"Timer Digest" Tim Ord ranked #5 for 6 months ending 10/6/06 and #1 in Gold for one year ending 1/13/06.
For 30 to 90 days horizons: Long SPX on 7/17/08 at 1260.32; sold on 8/7/08 at 1266.07 for 1/2% gain.
Monitoring purposes XAU: LONG XAU on 12/18/07 at 162.05.
Long Term Trend monitor purposes: Flat
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The ISE Sentiment Index is a unique put/call value that only uses opening long customer transactions to calculate bullish/bearish market direction. Opening long transactions are thought to best represent market sentiment because investors often buy call and put options to express their actual market view of a particular stock. Market maker and firm trades, which are excluded, are not considered representative of true market sentiment due to their specialized nature. As such, the ISEE calculation method allows for a more accurate measure of true investor sentiment than traditional put/call ratios. Finally, these small long only put and call buyers are throwing in the towel and are buying heavily into puts which has been a good sign for a bottom in the market in the past. Recently this group of option players picked out the January and March lows with the ISEE ratio below 60. When ISEE ratio reaches below 60 a bottom usually appears about a week later. We are writing this segment of the report about one hour before the close and at that time the ratio was 53. On the chart we have identified other time when this ratio fell below 60. This sentiment indicator has swung to the bullish camp and predicts a bottom in about a week which is in our time frame for a bottom on the usually occurrence for a bottom in the later part of the week going into Option Expiration week or early in Option Expiration week which is next week.
We Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.

Yesterday the NYSE McClellan Summation index turned down and implies the NYSE is now in decline mode for the short term. Yesterday we compared the current McClellan Summation index with the same pattern that developed back at the 1966 bottom and that is that both are forming a similar setup where the Summation index hit an extreme low then reversed and hit a extreme high and is the type of developments that appear at intermediate term lows. In early October the Summation index hit a record low of less then minus 400 and then reversed and hit a record high of +320 in early November. The buy signal comes on the next retracement down which is in process now. The next time the Summation index turns will imply the bottom has been see. Also the NYSE may hit a lower low but the Summation index should hit a much higher low and produce a positive divergence. Don’t know where exactly the next low will be but it won’t surprise us that it may come from the 2002 low near 800 level on the SPX and this low may show up next week. Also the Gold stocks appear to be tracking with the rest of the market and may not start to rally until after the SPX turns up.

Above is the Commitment of Traders (COT) for gold updated to November 4 close which is the most current report. The next update will come this Friday which will show the data up to Tuesday November 11. The Small Spec and Commercials are below the area where the last bottom in gold formed which was mid September. Therefore there appears be a double bottom forming on physical gold. The COT report suggests the physical gold rally may start soon.

Just for fun ( like there is any fun in the market right now) we took on the monthly chart when the full stochastic was below 20 and RSI near 30 and Commodity Channel Index (CCI) below -100. We took this study back to 1984 and three times these limits were hit on all these of these indicators. The first occurrence came in 1986 (which the XAU over doubled in he next 12 months), second time came in 1998 (XAU rallied strongly for 3 months and gain 60% or so) and third time is now. Therefore there appears to be a low nearby but to confirm the low we would need the monthly stochastic, monthly RSI and Monthly CCI to turn up which as not happen yet. Also the XAU has been tracking with the SPX and most likely the XAU won’t turn up until the SPX turns up.
Sold PMU on 2/29/08 at 1.20, bought at .81 for gain of 48%. Long KRY at 1.82 on 2/5/08. We are long PLM at 2.77 on 1/22/08. Holding CDE (average long at 2.77 (doubled our position on 9/12/08 at 1.46). Bought NXG at 3.26 on 6/4/07. We doubled our positions in KGC on (7/30/04) at 5.26 and we now have an average price at 6.07. Long NXG average of 2.26. For examples in how "Ord-Volume" works, visit www.ord-oracle.com.

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