At the Highs in the SPY in earlier June the New Highs New Lows indicator was making a bearish divergence with the modest rising in the SPY. Also the McClellan Oscillator was producing a bearish divergence along with the McClellan Summation index. Most momentum indicators have turned down, which include the McClellan Summation index, MACD, Bullish Percent index and the moving average of the RSI. Its unlikely these momentum indicators will turn back and even if they do they will show a negative divergence by making a lower high which would still be bearish. Near term the SPY may be drawing a Head and Shoulder Top and the Right Shoulder is forming now. There is symmetry in time and the Left Shoulder took three weeks to complete the Right may take that long also. Resistance lies at the 6/19 high near 93 and the next one up is the gap level that formed on 6/15 near 94. If either one of those areas is tested on lighter volume would imply resistance and mark the next short term high. In general we are expecting this market to move lower into July possible into August. A 50% retracement from the March low would come in near 81 and this potential Head and Shoulder Top has a downside target to 82. These downside target are not set in Stone but are reasonable targets for the next low. We are short the SPX at 883.92.

We Bought ASTM at 1.92, Biotech group. Long POWR at 13.70 on 12/14/07.

Above is the COT chart for Gold and courtesy of www.sentimentrader.com. When the Commercials are less then -1000 contracts long, (Commercials are always short because they hedge there gold positions that they mine) then a last rally in gold is possible. When the Commercials are below -2000, (like now) then a rally can still occur but is not as likely. The bottom window in the chart above shows what the Small Speculator is doing and right now there are very long and in an area where pull backs have formed in Gold. Even though we are very bullish on the bigger picture in gold, the current setup does not appear the rally will carry far. We bought GLD at 89 and will be holding on to this position. The gold stocks may pull back with the S&P’s and could pull back into early August and bottom with the S&P market. The next buy signal in GDX should produce a strong rise in the gold stocks and will be the place to be. Long GLD at 89 on 4/24/09. 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, Sold 5/13/09 at 1.55=6% gain). 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.

Above chart is the Rydex Precious Metals assets “courtesy of www.sentimentrader.com”. The bottom window shows the assets in the Rydex Precious Metals as a percent of all sectors. Previously when Rydex Precious Metals reached near .30 at least a short term high was present. The next window up is the Assets in the Rydex Precious metals fund and when it was this high in the past a short term pull back is near by. Again we are not bearish on Gold or the gold stocks, but the COT chart and Rydex Precious metals assets chart show that there may be a better time to buy later on. Our thinking is that Gold may move sideways a little longer and Gold stocks may pull back with the S&P market.