Professor’s Comments August 19, 2015
Posted by OMS at August 19th, 2015
The Dow fell 34 points, closing at 17,545. Volume was low again, coming in at 85 percent of its 10-day average. There were 99 new highs and 178 new lows.
Not much changed yesterday. The Dean’s List turned negative, but The Tide and both money flow indicators remain positive. So we continue to have mixed indicators.
Having mixed indicators on the cockpit tells me that it is still possible for the Dow to rally back to the 17,700 level. It’s not likely that this will happen, but it’s still possible. So all I’m doing is holding the positions I currently have in DXD, TWM, and the metals.
BTW, all 4 of the breadth indicators that make up The Tide are now negative on the Weekly chart. The Summation Index, Hi-Lo indicator and A-D oscillator have been negative since the first week in May. The Weekly Money Flow indicator tuned negative during the week of 5 June. However it popped its head above the moving average in mid-July and continues to remain positive. Once this weekly indicator starts to turn solidly negative, I would expect the downtrend to start in earnest. The Monthly MF indicator remains solidly negative. This indicator had been solidly positive since December 2010, providing support to the Bull Market for over 4 ½ years. But now its negative.
I mention this today because the Monthly MF indicator has only been negative 2 times in the last 10 years. It turned negative during the last few months of 2010, but more importantly, it turned negative in June 2008, with the Dow at 11,350. This led to a 4,911 point decline in the Dow. In other words, we need to be EXTREMELY careful now that the Monthly MF indicator is now negative. This is NOT something that should be taken lightly!
With gold pulling back yesterday, I took the opportunity to increase my ‘trial’ position in gold by adding a few shares of RGLD.
Most gold stocks appear to be forming the ‘Blade’ of a small Hockey Stick pattern. This is very normal after the first up move after a TLB Pattern. Once the ‘Blade’ completes, gold stocks should start their assault on their 200-day moving average where they will likely attempt a ‘Rope Jump’. So all I’m doing now that I have my ‘trial’ position is watching and waiting.
That’s what I’m doing,
h
Market Signals for 08-19-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | POS |
SUM IND | POS |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments