Professor’s Comments December 22, 2016
Posted by professor at December 22nd, 2016
The Dow fell 33 points, closing at 19,942. Volume was light, coming in at 74 percent of its 10-day average. There were 138 new highs and 20 new lows.
Yesterday’s light volume decline was not enough to turn the VTI negative. So, with mostly positive indicators on the cockpit, and Bullish seasonality factors associated with the Christmas Holiday period, it’s still likely that the Dow will test the 20,000 level before year’s end.
Transportation stocks were among the biggest losers yesterday. The transportation sector was one of the strongest sectors when the current rally started just after the election. However, the VTI on the sector has now turned negative at the same time my Money Flow indicators are negative. The VTI is still in the trend mode, so it’s possible that the trannies could still push a bit higher before the momentum starts to shifts. Nevertheless, I would be extremely careful with transportation stocks now that the VTI has turned negative.
When the rally started, I projected a target of 9,500 for the Dow transports. Last night, the index closed at 9,167, so it’s still a few hundred points away from the target derived from a large Hockey Stick Pattern that started last February. But here’s the thing: The current rally leg up of this Hockey Stick is final wave ‘E’ up of an even larger five wave pattern that goes back to November 2011. This pattern started near the 4,000 level. So, if I’m right, once the transports start to head down, things could get very ugly, as the target for the decline is where the pattern began or near the 4,000 level. Please be careful with transportation stocks in the weeks ahead.
BTW, the chart on the tyrannies suggests the decline to 4,000 will likely take place over the next 2+ years. If you own or trade the trannies, you might want to look at how the transports rallied from the ‘Blade’ of the Hockey Stick Pattern. And while you’re doing this, look at the larger 5 wave pattern to a top on a weekly chart. Both patterns are picture perfect! And both suggest a top is near.
Remember, in Class, one of the things you learned was that the market moves up in five waves up and then corrects in three waves down. You also learned that no stock, no matter how good, goes to heaven. Stocks go to targets. And right now, the trannies and the Dow Industrials are close to or exceeding (because of the allowable through over wave in the Dow) their projected targets. If the VTI on the Dow starts to turn negative now, and joins the trannies, it could mark the beginning of a significant down trend.
U.S. Markets will be closed Monday, 26 December for Christmas, and Monday, 2 January for New Years. I’ll be posting a brief Comments/Weekend Strategy Review tomorrow, 23 December and again on 30 December. I have a short family cruise planned for the New Year Holiday, and will be posting on reduced schedule while I’m away. But don’t worry. I’ll still be updating the cockpit indicators and Lists every night. If I see If I see a change to the VTI, or if something important pops up, I’ll let you know with an intraday update.
I wish you a Merry Christmas and Happy, Healthy, and Prosperous New Year.
That’s what I’m doing.
Market Signals for
12-22-2016
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS-T |
One hour video recorded from May 28, 2016 The Professor’s Signs of a Major Market Turn – Prospectives and the Projected Timing and Levels One hour streaming video – includes webinar handouts The Professor usually holds an update class whenever the Market looks like it may be making a major turn. If you have been following the Professor’s Comments you know that a turn is due….. LEARN MORE
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
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Category: Professor's Comments