Professor’s Comments August 24, 2016
Posted by OMS at August 24th, 2016
The Dow rallied for 102 points early in the session, then gave back 83 of those points to close up 18 points at 18,547. The rally and subsequent decline was likely the Big Move predicted by Tuesday’s small change in the A-D oscillator. Volume was moderate, coming in at 97 percent of its 10-day average. There were 224 new highs and only 6 new lows.
Yesterday’s rally was likely all or part of final wave ‘c’ of the a-b-c pattern I talked about yesterday. If this is the case, we should start to see several sell signals appear on the cockpit indicators very soon. However with Fed officials meeting at Jackson Hole this week, it’s not likely that a major decline will start in this environment. However if they come out of the mountains with anything negative, it could trigger the next downside move.
Right now, I’m still getting mixed signals from the cockpit. Both the Tide and the Dean’s List are neutral. Yesterday’s rally caused the Hi-Lo indicator to turn positive, which caused The Tide to turn neutral. So for now, 3 of the 4 breadth indicators are still negative.
The VTI on the Dow remains negative, but the VTI on the NASDAQ is still positive. This is one of the reasons that the overall market has not started to move lower. The other reason is the positive Money Flow indicators, which took a big hit after yesterday’s session. I found it interesting that my institutional money flow indicators fell on a day when the overall money flow indicators finished positive. This tells me that the Big boys were the ones doing most of the selling yesterday.
Yesterday’s up-down trading also caused a Hanging Man candlestick to appear on the Dow. Hanging Man patterns usually appear at or near major tops. I consider them warnings, but not tradable signals.
So with mixed indicators, I’m still on the sidelines. However, now that DXD is on the Dean’s List, I do have an inverse index ETF to trade. If the Money Flow indicator on the Dow turns negative in the next day or so, I’ll start looking to establish a small trial position. But I’d really like to see the momentum shift to the downside before I become aggressive. I’m not seeing this yet.
Gold continues to develop what appears to be a triangle for wave 4. The VTI on GLD is still neutral with an oversold (20.8) 2-period RSI Wilder. The conditions for a Rifle Trade are still present on the Daily chart, so watch the 60s for a trigger. My target for GLD remains at the 135+ level. Yesterday GLD closed at 127.76.
BTW, if you look at the 2-period RSI on Daily chart of GLD, you will see that every time the indicator became oversold within the triangle, it was followed by a rally of 1.5 to 5 points. As long as the 50 remains above the 200 on GLD, I will continue to look for Rifle Trades.
That’s what I’m doing,
h
Market Signals for
08-24-2016
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | NEG |
VTI | NEG |
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