Professor’s Comments April 1, 2016

Posted by OMS  at April 1st, 2016

The Dow fell 32 points, closing at 17,685.  Volume was moderate, coming in at 94 percent of its 10-day average.  There were 168 new highs and 7 new lows.

Even though there were no changes to the cockpit indicators yesterday, I did note a change to the Money Flow indicators on two of the major indexes.  As of yesterday, the Money Flow indicators on the DJIA, which uses NYSE data, and the NASDAQ have turned negative.  These indicators differ slightly from the Money Flow indicators on the cockpit for the DIA and QQQ, which use their own data.  I mention this today because even though the Money Flows on the DIA and QQQ are still positive, they are very close to turning negative.  As I mentioned previously, negative Money Flow indicators are usually one of the first signs that the market is starting to roll over.

There was also a ‘relatively’ small change in the A-D oscillator yesterday of 13 points.  That’s slightly outside the 10-point range I use to turn on the Small Change light on the cockpit.  But it’s close enough that we could have another Big Move within the next 1-2 days.  And given that the positive bias from Mutual Fund end-of quarter window dressing is over, it sets-up the possibility of a Big Move to the downside.  We’ll see.

Just about all of my other indicators, including my trend indicators, are still pretty strong.  So it’s going to take some doing before they turn negative.  The Summation Index and A-D oscillator could turn negative at any time now.  But the Up-Down oscillator and the Hi-Lo indicator look like they will remain positive for at least another few days.  In other words, even if the market closes down today, it’s likely that it will only result in a neutral Tide.

At this point, I need to see a negative Tide before I start buying inverse index ETFs. 

BTW, the past two days of trading have caused a strange candlestick pattern to appear on the Dow and NASDAQ.  I’m not quite sure just what the pattern is at this point, but if today is a significant down day, it could turn into one of several negative patterns.  For example, the same partial pattern appeared on 3-4 November to mark the most recent top in the Dow.  The pattern also appeared on several other occasions last summer when the Dow was putting in its major top.  Anyhow, right now it’s only a partial pattern that still needs another bar to complete.  But if today is a big down day, the candlesticks could be giving us a very important sign.

Watching and waiting. 

That’s what I’m doing,

h

Market Signals for

04-01-2016

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