11.18.14 – Nothing But Clear Sky Ahead?

Equity indexes closed at new highs as health-care and raw-material companies rallied.  The Dow Industrials added 40 points to close at 17,687.82 while the S&P 500 Index gained .51%.  The Nasdaq Composite was up .67%.  Gold and silver rallied today and volatility continues to fall.

GDXJ, the junior gold miners ETF, was a big winner yesterday and it did it again today, climbing 6.76% on almost double average daily volume.  GREK, the Greece 20 ETF, jumped 5.92% but it’s still far below its 50-day and 200-day SMAs.  SIL, the silver ETF, was up 5.60% and TAN, the solar ETF, was shining as it gained 4.97%.  Please click on the symbols for details.

It seems hard to believe the market can keep climbing without pulling back but despite JP Morgan Chase today telling its investors to dump U.S. equities, it ain’t happening yet.  In fact, I see confirmation of the move in the long-term (monthly) Volume Zone Oscillator (VZO) and Price Zone Oscillator (PZO) charts on SPY, the S&P 500 Index ETF.

The oscillators, developed by market technician Walid Khalil, reflect buying and selling pressure in the security being evaluated.  When the security’s price is above the 60-bar EMA and the oscillator is above +15 and rising, that’s bullish.  Please take a look at the PZO and VZO charts below, which can be made full-screen by clicking on them.  PZO is on the left and VZO is on the right:

SPY monthly

Normally, when the oscillator rises above +60 and then closes below, that’s a signal to sell. But there are times when the ETF trades sideways rather than pulls back even though the oscillator declines, and then the oscillator begins rising again.  That’s what happened back in June/July of last year and January of this year.  You can see how both PZO and VZO broke upwards through their descending trendlines at the end of last month.

So does this mean it’s clear sailing ahead for the stock market?  It’s hard to believe that will be the case but the market does climb a wall of worry.  In any event, the answer to that question is something we will know, in the fullness of time.

About Dave

David Steckler enjoyed 24+ years of experience as an investment counselor and portfolio manager before retiring. A former professor at Lindenwood University in Missouri, he also was a member and past president of the American Association of Professional Technical Analysts (AAPTA), and a member of the Market Technicians Association (MTA).
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