Professor’s Comments June 23, 2017
Posted by OMS at June 23rd, 2017
The Dow fell 13 points yesterday, closing at 21,357. The NASDAQ rose 3 points. Volume on the NYSE was moderate, coming in at 94 percent of its 10-day average. There were 93 new highs and 69 new lows.
Not much changed after yesterday’s trading. It still appears the NASDAQ 100 (QQQ) is developing a ‘Blade’ on the large down ‘Stick’ that occurred on 15 June. I continue to watch this developing ‘Blade’ for a break below 137.74.
The 137.74 level also represents the neckline of a larger Head & Shoulders Pattern formed by connecting the lows of 18 May and 12 June. If this important support level is broken, the Q’s will likely test the 200-day support near the 128 level. If this level is broken, it would constitute a ‘Rope Jump, identifying the decline as Wave 1 down of a new Bear Market.
One of the things students should note is the current state of the three PT indicators as the Q’s develop their negative Hockey Stick Pattern. The DMI, turned positive last night after being negative for 10 days. It’s positive, but only by a small amount. This is something that usually happens during the formation of the ‘Blade’. The P-volume remains negative and continues to decline. As price of the Q’s moved higher, the P-volume did not, setting up a classic negative divergence. Same for the MACD. Since the 9 June drop, our momentum indicator has moved lower and is now very close to the zero line. A decline below zero would mean that the momentum has turned negative.
BTW, the MACD on the Q’s has not been negative since the November election. It’s been positive for almost 8 months! And now, it’s very close to turning negative. Remember, a week ago Wednesday, the Fed said it was going to start ‘unwinding’ its balance sheet. If this market needed a reason for the momentum to turn negative, that was it!
Bottom Line: Almost any decline now in the Q’s will turn all three of the PT indicators negative. So, we are very close to seeing the three things that the Professor’s Methodology is based on occur. Those three things are Pattern, Indicators, and Lists. The Pattern is there — actually, we have two patterns now; a negative Hockey Stick and a Classic Head & Shoulders. These patterns developed after the Q’s completed a Three Highs to a Top Pattern. If the Q’s continue to move down, or break trendline support of the ‘Blade’, all three indicators will turn negative. And if this happens, QQQ and QLD will almost certainly fall off the Dean’s List and be replace by QID, the inverse ETF for the NASDAQ-100.
This is why I continue to watch the Q’s. They could be very close to generating a Major Sell Signal.
Yesterday’s Sector Report continued to weaken. The report now shows only 11 strong sectors, down 1 from the previous day, and 13 weak sectors. So, the weak sectors now outnumber the strong sectors. Hmmm? Leisure, PharmaBio, Computers, Healthcare, and Semis lead the strong sector list, with Energy, Retail, Autos, Telecoms, and Utilities lagging.
Gold (GLD) appears to be very close to completing sub-wave ‘b’ up within an a-b-c pattern for Wave 2 down. Last night, the 2-period RSI on GLD had a reading of 73.5 with the VTI showing 37.7. So, the gold ETF is slightly overbought with no trend in place. If GLD moves higher today, it will become EXTREMELY overbought without a Trend. Once this happens, gold and mining stocks should start to move lower to complete wave ‘c’ of 2 down.
That’s what I’m doing,
h
Market Signals for
06-23-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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
FAQ
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Category: Professor's Comments