Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market SP-500, GLD and GDX, Down More or Now Up?

Stock-Markets / Financial Markets 2010 Jul 06, 2010 - 05:00 PM GMT

By: John_Townsend

Stock-Markets Best Financial Markets Analysis ArticleIts mid afternoon Tuesday and the markets are selling off – still.  It seems like it will never end.  Big red candles on every chart I look.  The VIX, the temperature gauge of fear, is rising again and the news headlines are filled with gut wrenching uncertainties about US Municipals, foreign countries that are characterized as ticking time bombs and opinion that we are headed for another Great Depression.

With that backdrop, how about we ponder some charts and see if this market correction is likely to stay with us for infinity and beyond or if perhaps it has not only worn out its welcome, but is also close to having its flame extinguished.

Let’s begin with the SP-500 hourly chart.  I made this chart online at the website  The indicator displayed below price is the True Strength Index, commonly referred to as the TSI.  It is an elegantly smooth and responsive momentum indicator.

First off, we’ll note that both the SP-500 and the TSI indicator have a trend line of lower highs connected by a white line.  The TSI trend line spans the entire 11 days of the SP-500 correction from 1131 to this moment.

The exact midpoint of this SP-500 down leg is around 1,071 where we conveniently find an open gap that is begging to be filled.  Price today rallied up to the white trend line and has since been repelled lower.  It would be easy to conclude, at this moment, that the stock market will continue to fall apart except that the True Strength Index indicator is suggesting something quite different.

The white trend line of the TSI has already given a BUY signal – as it was broken to the upside when price was just 1,017.  Since early Friday, the indicator of momentum has continued to rise and actually reached the ZERO level before being turned down an hour or two ago. 

When the TSI indicator is rising ABOVE zero, price will absolutely be rising simultaneously.  That is how the indicator was designed to work.  As we are now very close to crossing the ZERO level, I take that as a bullish sign.

The other thing the True Strength Index is showing us is a favorable divergence.  The indicator is making higher lows while the SP-500 price is flat.  This indicates that a critical shift in momentum has occurred or is about to occur.

Next, let’s look at GLD and see if we can figure out if it is likely to continue falling.  This is a 30 minute chart of GLD.

We notice that price is currently behaving in a manner curiously similar to a multi-day patch of time beginning 8 sessions ago.  There appear to be two prior instances when a divergence of GLD price with respect to the True Strength Index indicator preceded a run up in price.  Perhaps the current divergence in place signals a bottom, as before.  The trend line of the TSI has not yet broken out to the upside, so the jury is still out on how this will be resolved.  But the clues look very favorable for GLD having bottomed today.

If gold is about to bottom, or has already bottomed, one would think the miners would somehow confirm that possibility – so let’s now take a look at GDX to see what we can find.

I made this chart online at  On first blush, I saw those big red candles and it was difficult to emotionally get excited about what I saw.   Then I thought it curious that the lows across the chart seemed rather repetitive… maybe they were cycles, or something.

At you can select ‘Annotate – Flash or Java’ and then be able to use some interesting measurement and drawing tools on the chart.  I selected a tool that displays on the screen with vertical lines and you pull the indicator left and right across the screen to make the lines more or less frequent and therefore, closer or further apart.  Each line is equidistant from the other – and looks like a series of blue parallel lines.

The application for this tool, of course, is to explore whether a price chart displays cyclical characteristics.

I pulled the tool across the GDX chart, creating blue parallel lines equidistant one from the other, and nearly could not believe my eyes.   Plain as day, there were the cycles of GDX.  Sometimes a cycle bottoms a few days early, sometimes a few days late.  But after the cycle bottomed price always exploded higher.  Could it be that our recent horrible red candles are occurring right on schedule and about to turn into white candles exploding higher and higher?

I invite you to visit my website at  I usually offer a few posts each day on my market observations, often comment on the particular stocks I am currently trading, and try to show ways to use the True Strength Index indicator to make some sense of where the precious metals and their miners are heading.  You may comment at my blog or contact me at:

Thank you for reading my thoughts.  Please do not hesitate to share yours with me.

John Townsend

© 2010 Copyright John Townsend - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in