Professor’s Comments February 24, 2017
Posted by OMS at February 24th, 2017
The markets were mixed again yesterday. The Dow rose 35 points, closing at 20,810. The NASDAQ and Russell 2K fell 25 and 9 points respectively. The S&P500 was flat. Volume on the NYSE was heavy, coming in at 112 percent of its 10-day average. There were 214 new highs and 16 new lows.
Yesterday’s decline in the NASDAQ may have been the start of Wave 4 down for that index. The small rise in the Dow might have marked the completion of Wave 3 up in the Dow. IF this is the case, the major indexes should start to pullback today.
Wave 4’s are tough to predict. Given that the markets have been on a rocket ship ride, I would not expect the pullback to be very significant, maybe 200+ points on the Dow. However even though the pullback should be relatively shallow, it should take some time off the clock, enabling the markets to rest a bit before making one final run to a top in mid-March. Wave 4’s usually form triangles, and because triangles usually have 5 waves, they are often difficult to trade. I don’t expect this one to be any different.
If you’re long the current market, it might be a good time to take a few bucks off the table. The reason I say this is because markets have a way of fooling us, and even though the current wave count suggests two more waves (wave 4 down and wave 5 up) are required to complete the Ending Diagonal Pattern, they don’t have to happen. Remember, the final wave of an Ending Diagonal Pattern can truncate. Also, the Russell 2K appears to have completed its pattern, so if you own small cap stocks, the top could already be in.
There was a small change in the A-D oscillator yesterday of less than 4 points. The reading of 16.5 is also very close to turning negative. So, IF the market starts to head down today or on Monday, not only would it likely produce a Big Move, it could also turn the A-D oscillator negative. The Up-Down Oscillator is also close to turning negative with a reading of 5.2, so almost any significant down move could produce a change in Tide. Also, the VTI had a very small change yesterday. The indicator is still heading up, but only barely. I would not like to be long this market if the VTI and The Tide both turn negative.
Yesterday’s Sector Report showed 21 strong sectors and 3 weak sectors. The Banks, Transports, and Semiconductors continue to lead, with Food, Service, and Telecoms lagging.
Gold rose yesterday, but mining stocks were flat. GLD rose 1.03 to 118.94. It reached its highest level since 9 February and might have marked the start of its Wave 3 of 3 rally. The VTI on GLD is in the Up-Trend Mode and continues to move up. All my Volume and Money Flow indicators remain positive. The only negative I see is the fact that the 50 remains below the 200, so until the moving averages cross, there could still be some backing and filling. On the other hand, the price of the ETF is now over 3 points above the 50, so if GLD continues to rise, the 50 is going to move up fast.
GDX only rose 0.04 cents to 24.37. The ETF continues to wait patiently for GLD to start its Up Trend. The 2-period RSI on GDX only rose slightly yesterday, finishing at 16.5. So, the ETF remains in oversold territory while already in an Up Trend (50>200). Rifle Trade? The last time GDX was this oversold was on 26 January when the ETF was trading at 22.87. Nine days later, the ETF was 3 points higher. Hmmm?
BTW, UDN, the inverse U.S. Dollar ETF, is back on the Dean’s List, which is what you want to see if you’re trading gold.
On the energy front, DUG remains on the Dean’s List even though March is fast approaching. DUG replaced DIG on the Dean’s List on 5 January 2017 with the ETF trading at 36.76. Yesterday DUG closed at 41.4 for a 12.6 percent gain in less than two months. Before that DIG replaced DUG on 10 November with DIG trading at 38.58. Six weeks later the ETF was trading at 46.83 for a 8.25 or 21.3 percent gain. Pay attention to the Energy Sticks in the Sand, especially now with March approaching.
That’s what I’m doing,
h
Market Signals for
02-24-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS-T |
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