Professor’s Comments August 17, 2017
Posted by OMS at August 17th, 2017
The markets rose as expected yesterday. The Dow finished up 26 points, closing at 22,025. The NASDAQ and SPX rose 12 and 3 points respectively. Volume on the NYSE was moderate, coming in at 93 percent of its 10-day average. There were 81 new highs and 100 new lows. Students should note that new lows continue to out-pace new highs, even though the market rallied yesterday.
Yesterday’s early rally and late day pullback was likely the completion of wave ‘c’ of 2 up and the start of wave 3 down. If this is the case, the markets should start an impulsive decline within the next few days.
Since the Dow made its high on 8 August, the index has fallen in five waves down and rallied in three waves up. Five waves down followed by three waves up means the primary trend has shifted to down.
Also, yesterday’s trading action formed another ‘Star’ Pattern, like the one that occurred on 8 August. So, if the market trades lower today, that Star will turn into an Evening Star, which is a very reliable Bearish candlestick pattern. Recall that the Evening Star that occurred on 8-9 August led to a decline of 205 points on 10 August.
My downside target for the Dow remains near the 20,400.
The Tide remains negative. The VTI-volume indicator on the Dow remains on a short -term Buy Signal. The same 2-part indicator on the NASDAQ and SPX (SPY) remains on a Sell Signal. The cockpit indicators remain mixed, with the Money Flow on the Dow being negative and showing significant negative divergence. Once these indicators turn negative, they will confirm that wave 3 down is underway.
Wednesday’s Sector Report was pretty much unchanged. The number of strong sectors increased to 10 compared to 14 weak sectors. Materials, Insurance, Financial, Leisure, and Computers lead the strong sector list, with Service, Telecoms, Healthcare, Energy, and Autos lagging. The relative strength of the highest ranking strong sectors remains low, with an RS value of only 1. The top 4 weak sectors continue to show RS values of -3 or -4, so the weak sectors not only outnumber the strong sectors, they are a lot weaker than the strong sectors are strong. The weak sectors have also started to trend down as 9 of the 10 sectors are now showing negative trend scores. Only 5 of the 10 strong sectors are showing positive trend scores. This means that 5 of the strong sectors have already started to trend lower!
Most gold and mining stocks rose yesterday. Gold (GLD) rose 0.89 cents to 121.87. My two-part VTI-volume indicator on GLD remains positive. Yesterday the volume portion of the signal turned positive again. As long as this indicator remains positive, GLD has a shot at its wave ‘b’ target near 125 before it starts its wave ‘c’ decline toward the 105 level.
Students should also note that EWQ and EWG, the tracking ETFs for France and Germany, are back on the Dean’s List as European markets have moved higher along with U.S. markets in their wave ‘2’ corrective rallies. However, UPV, the positive ETF for Europe has still NOT appeared on The Dean’s List. One of the things I’ll be watching very closely in the days ahead is for EPV, the inverse ETF for Europe, to appear on the Dean’s List. If it does, it will be additional confirmation that the wave 3 decline I expect is underway. EPV fell 0.62 cents yesterday to 34.63. The Three Lows to a Bottom (TLB) Pattern on EPV has an initial target near the April high of 44. I’m a buyer IF/when the DMI turns positive.
That’s what I’m doing,
h
BTW, when the Dow was up 60+ points yesterday, I added to my ‘trial’ positions in inverse index ETFs.
Market Signals for
08-17-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | POS |
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