S&P 500: Indicator Signals Start Of Potential New Bull Market
2022.06.01 17:31
- SPX Monitoring purposes; Long SPX on 5/31/22 at 4151.09.
- Monitoring purposes GOLD: Long GDX (NYSE:GDX) on 10/9/20 at 40.78.
- Long Term SPX monitor purposes; Neutral
The bottom window is the NYSE McClellan Oscillator. We identified the times when the McClellan Oscillator closed above +300 (going back to mid-2005) with blue vertical lines, and all happened at significant lows or in an uptrend. It’s rare for the McClellan Oscillator to reach above +300; Friday, it closed at +351.
What that means in the current market is that the S&P 500 is building a base to go higher, or the rally has started. In both scenarios, it suggests the downtrend is over.
Over the last three days, the rally produced a “Zweig Breadth Thrust”. This indicator signals the start of a potential new bull market when it moves from a level of below 40% to a level above 61.5% within any 10-day period. We pointed out previous times on the chart above when the “Zweig Breadth Thrust” occurred. It could be stopping here, but a new bull run is possible.
It’s easier to see on the bottom window, which is the ETF for gold, SPDR® Gold Shares (NYSE:GLD). GLD is on the monthly timeframe, and it’s easy to see the Bollinger Bands pinching. The “pinch” could go on for a couple of months or end today. It is hard to say when the “pinch” will end.
The pattern forming appears to be a Head and Shoulders bottom, which are usually symmetric in time and price. The Left Shoulder took about 1 ½ years to form, which in turn, the Right Shoulder should take about 1 ½ years to form, and GLD is at that mark now. The Gold chart (the big window) shows that market has only retraced 38.2% of the rally that began in late 2018 and suggests gold is at the halfway point of the up move, suggesting a strong rally is very near. Time is running out of the Bollinger Band “Pinch,” and an impulse wave higher should be starting soon.
