Bottom Line On The Market

July 14, 2003
For 30 to 90 days horizon: Short SPX on close at 1003.86 on 7/14/03.
Short term trades, one day to one-week horizon: Flat.
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What to expect now:
The McClellan Oscillator is showing a negative divergence on the NYSE and a bearish sign. Today the S&P tested the previous high of June 17 and volume did shrink near 6% against that high. Today's trading also tested the June 6 high and volume fell by 22% and a bearish development. When a market approaches a previous high, two things can happen. Either the market passes through that high on high volume (called "Jumping the Creek") or hits that high with decreased volume and then backs off. We sent out a special email today that said, "A Sell signal will be generated if the SPX closes below 1007.68 today. If that happens we will short the SPX on the close." Since the SPX closed at 1003.86 today we are short the SPX at 1003.86.

Nasdaq Composite:
The Nasdaq Appears to be drawing a bearish "Rising Wedge". "Rising Wedge" patterns have downside targets from where they began and in this case it would imply a decline down to 1600. "Rising Wedge" patterns are not long-term bearish patterns. This pattern suggests that a pull back to 1600 in an uptrend may appear near term. After the pull back is complete, the Nasdaq may resume the uptrend. The McClellan Oscillator is providing a favorable divergence for the longer term. The breakout that came on July 7 above the previous high of June 6 came on a reduced volume 37% and implied a false break to the upside. Today's rally also tested the May 15, 2002 "Swing High" and volume shrank by 24% and a bearish sign for the short term. Most "Rising Wedge" patterns have a double top on the third top. Today's action may be the first top of the third top. We may short the second top of the third top. We will wait for this signal.
We did a long-term study on the continuation contract on Gold today. The Pattern that has been going on since February highs is a consolidation and this consolidation appears to be forming a "B" wave of an "ABC" pattern up from the low of 2001 near the 255 level. If the current pattern is the "B" wave then the "C" wave should take the market to 450 level. The 450 level jumps the "Creek" at the 1996 high of 420 and would be another bullish sign. In a nutshell, the "Jumping of the Creek at the 420 level would have an upside target to 505.
We are holding BGO that was bought at 1.05 and 1.28. We added to BGO 6/18/03 at 1.17. BGO appears to be consolidating right below the breakout area of 1/27 at the 1.51 level. The recent high has been 1.50.
The weekly charts on Drooy gave a buy on 3/21 and the Monthly charts gave a buy by closing above 2.23 on March 31. Therefore, Drooy is in a longer-term buy signal both on the weekly charts and monthly charts. We bought Drooy (3/24/03) at 2.40. We sold 1/2 of our position at 2.83 on Thursday 4/17/03. We bought back our 1/2 position of Drooy (4/28/03) at 2.33. We added another position at 2.74 (6/18/03). Drooy has been in a trading range since mid March and has built up a significant amount of "Cause". This condition suggests when the breakout does come it will imply a big move up.
All the Best,
Tim Ord

email: timord@radiks.net

visit my website at www.marketweb.com/ord

Tim Ord, The Ord Oracle
17300 Van Dorn Street
Walton, NE 68461
(402) 486- 0362

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