Professor’s Comments June 16, 2015
Posted by OMS at June 16th, 2015
The Dow fell 107 points, closing at 17,781. Volume was moderate, coming in at 97 percent of its 10-day average. There were 49 new highs and 123 new lows.
The markets remain on mixed signals. The Dean’s List continues to maintain its neutral stance with both positive and negative index ETFs on the List. This tells me that money is simply moving from large cap international stocks into the smaller domestic issues. Money is still NOT leaving the market in the way it should if a major crash was underway.
Also, yesterday’s decline in the Dow still appeared to be corrective vs. impulsive. The Dow got as low as 17,698 before rallying almost 100 points into the close. If a major decline was underway, I would not expect to see any sort of bounce back rally. So it is possible that yesterday’s decline was part of corrective wave ‘b’ down in the a-b-c pattern. If this is the case, then equities should start to rally later this week back to 18,350+.
Another interesting change to the Dean’s List occurred last night. TMF and TLT replaced TBT on the Dean’s List. So with the discussions for a Greek bailout appearing to break down, it appears that some European money is starting to flow into U.S. Bonds. We saw this occur back in August 2011, when TMF moved from 38 to 80 in 5+ weeks. Is a similar situation starting to happen now?
Same for gold. Gold moved slightly higher yesterday, with GLD closing at 113.73. GLD has moved onto the Dean’s List along with a few other gold ETFs like SGOL and GOLD. It’s a start, but I would like to see more mining stocks on the list to confirm that a rally is starting. I did notice that the P-volume and MF on GLD have turned positive, so if the other two PT indicators turn positive, I’m a buyer.
Actually, the gold ETF that I’m looking to buy now is GDX. I bought a few shares yesterday near 18.60. The MF indicator is still negative on the ETF as the P-volume. But both are starting to show positive divergence. With gold (the metal) starting to show signs that Major Wave 4 down is over, and with everything that is happening in Europe, I decided to add a few shares of GDX to my portfolio.
BTW, another recent change to the Dean’s List was the addition of the UDN/ULE combo. ULE is the positive ETF for the Euro and UDN is the inverse ETF for the dollar. For the past few months, we have seen EUO, the inverse Euro ETF on the Dean’s List as the Euro has declined and the Dollar moved higher. In my Update Classes, I talk about currency pairs like UUP/EUO and UDN/ULE and the inverse relationship that appears to exist. I also talk about the inverse relationship between the dollar and gold.
So now with UDN and ULE moving onto the Dean’s List, it’s telling me that the dollar is starting to weaken with respect to the Euro. For the past year, my charts were saying that the dollar should top near the 97-98 level before starting a major decline. And now that this has happened, the charts are now saying that the dollar could get cut in half during the next few years. So now that UDN/ULE have replaced UUP/EUO on the Dean’s List, I have to start looking at these ETFs very closely for my IRA. Especially now that all of the indicators are nice and Green.
Also, as long as UDN and ULE remain on the Dean’s List, I have to be looking for the start of a rally in gold. That’s why I bought a few shares of GDX.
Watch the Dean’s List. It will tell you a lot about what’s really happening in Europe.
That’s what I’m doing,
h
Market Signals for 06-16-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
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