Closing Stats / Miners Trading System

Today we had a very dominant Price/Volume relationship, it was Close Up / Volume Down.

Of the NYSE composite there were 3358 in the dominant relationship followed by Close Down / Volume Down at 1340 and Close Up / Volume Up at 1157. There were 809 stocks closing down on lower volume.

The Dow-30 had 26 stocks closing up on lower volume and 3 stocks closing down on lower volume; one stock closed up on increasing volume.

The NASDAQ 100 had 77 stocks closing up on lighter volume and a total of 13 decliners.

The S&P-500 saw 409 stocks in the dominant P/V relationship with 57 decliners.

The Russell 2000 had 1349 stocks in the dominant P/V relationship with a total of 453 decliners.

Typically Close Up/Volume down is the most bearish P/V relationship, but it must be looked at within the context of the current market environment. With all 4 averages below their main resistance level (which is the area the market backed away from last week when I said the market needed to pullback and regroup) there won't be a lot of confidence in chasing upside price moves and certainly we won't see volume rise due to short covering until the resistance level is decisively broken. Being this is the case, I'm not overly concerned about the P/V relationship.

The Miners Trading system is still long (both versions) NUGT. The 3% stop loss that is used in the system is at $27.41, today's close was $27.44.

Overall, there seems to be improvement in the technicals of NUGT.

 The 10 min chart shows a base-like formation with a breakout at the $27.50 area. RSI has a positive divergence as well during this time, that looks like a base forming.

 There was also a leading positive 3C divergence in the afternoon today as the triangle matures.

 The daily chart seems to be showing an extensive longer term base forming in the miners, so I'll also be looking at individual names in the group to see if there are any potential long candidates. As I have explained before, the miners are sitting on deposits of gold and silver and comparing the group's price to the price of gold (considering their deposits), the miner groups s trading at the equivalent of about $350 an oz. of gold, a substantial discount that may see some real investment interest, especially with the Dodd/Frank bill banning OTC silver and gold trading.

 Here's the 15 min. chart also showing some substantial improvement at an area that looks a lot like a base.

The 10 min. chart also looks bullish.

Back to the market....

The market actually held up pretty well considering some of the economic data today, such as the Dallas Fed's manufacturing index which came in at a huge miss. This data suggests as the trajectory of recent data suggests that ISM (Institute for Supply Management) when it comes out, will print below 50, which is contraction. All in all, the market took it in stride today.

We also heard from the Fed's Hoenig, a long time fiscal hawk. I mentioned his statements earlier today, but they certainly weren't what the financials wanted to hear. again the market took it in stride.

Also we had a Treasury Auction today of 2 year notes that DID NOT go well. The indirect bid came in at an astonishingly low 22% of the total, the loose translation could be summed up as "Who will be the buyer of Treasuries once the Fed winds down QE2?" Foreign central banks showed little interest in them today, leaving the Primary Dealers to clean up the mess, taking down 64% of the total auction and I'm quite sure they are none-to-pleased to be holding these notes either. Again, the market took it in stride.

In short, sentiment today was strong enough to lift the markets in the face of some not so encouraging news.

PLEASE DO NOT interpret what I have laid out above as a bullish perspective on the market. I've been looking for a market bounce in which to sell (short) in to. My primary view is that the markets are close to the second shoe dropping and if the first one may have been a ballet slipper, I believe the second shoe will be more akin to a steel toe boot. There's a big difference between tactical and strategic, a bounce n the markets is tactical, allowing us to sell short in a much better environment, the selling short the bounce is the strategic view. However we have to be vigilant each and every day, especially as the Greek situation winds up this week.

While financials may be showing signs of a bounce on an hourly chart...

 FAS-Bullish Financials on a 60 minute chart...

The big picture is quite different-(FAZ bearish financials on a daily chart). This daily divergence is much more important then the hourly divergence in FAS, it's longer, stronger and on  much more important timeframe.

I'm going to look through some miners and Chinese reverse mergers (a hot bed of fraudulent companies) as well as run some scans and take a look at breadth indications.