Professor’s Comments June 27, 2017

Posted by OMS  at June 27th, 2017

The markets were mixed yesterday.  The Dow rose 15 points, closing at 21,410.  The NASDAQ fell 15 points, while the S&P was flat.  Volume on the NYSE was moderate, coming in at 91 percent of its 10-day average.  There were 149 new highs and 8 new lows.

Not much changed with the indexes after yesterday’s trading.  The patterns are still clouded when it comes to the Dow and SPX.  The most likely scenario is that the Dow is in final Wave ‘E’ up on its way toward 22,000+.  However, I still cannot negate the alternate pattern on the Dow that suggests it is about to start another leg down for Wave ‘D’ down.  If this is the case, the Dow should start to decline soon, toward 21,050-21,100, before rallying back toward 21,500+.

The clearest wave count remains on the NASDAQ where yesterday’s decline might have been the start of a move that will break the ‘Blade’ that has been forming since 12 June.  Students should watch QQQ for a break of the lower trend of the ‘Blade’, now located at the 138.20 level.  If this level is broken, the Q’s could drop to 200-day moving average support currently near the 128.5 level. This would be a very significant development for the markets, and ‘FANG’ stocks in particular.

Yesterday, the Money Flow indicator on the DOW (DIA) turned negative for the first time since 23 May.  The Money Flow indicator on the QQQ remained positive, but it too fell yesterday and is close to turning negative.  If this indicator turns negative, given the current pattern on the NASDAQ, it would likely mean the markets have reached an important top.

Gold fell hard yesterday. GLD dropped 1.07 points to 118.36.  However, the ETF is now oversold without a trend in place so it should rally for the next day or so.  Looking at the indicators, it’s possible that the rally will likely be a fake out rally, taking GLD a few points higher to complete sub-wave ‘b’ up before wave ‘c’ down begins.  The VTI on GLD is currently in no man’s land, with a reading of 37.7.  I can’t get excited about gold until it’s VTI shows a positive bias (above 50).  Until this happens, I must consider any rally to be part of sub-wave ‘b’ up.

OIL continues to be an interesting speculation at this point.  I’m not ready to call the bottom in crude prices yet, but that Three Lows to a Bottom (TLB) Pattern in OIL is awfully tempting.  The target for the pattern is 5.89, which is the interim high between the first two lows.  OIL closed at 4.56 last night.

Same comments apply to DIG, the oil and gas ETF.  It too is deeply oversold and should rally soon.  DIG closed at 31.01 last night.  Target of the TLB pattern is 35.26.

I’m only mentioning energy now because we’re approaching the end of the month, and most Mutual Funds will be looking for places to put money. They will likely be rotating out of some of the overpriced large cap ‘FANG’ stocks and into some of the beaten down.  This could cause a small pop in energy for the next week or so.  Students should watch the short-term indicators for a possible scalp trade.   However, IF the Daily DMI on OIL or DIG turns positive during the ‘scalp trade’, it would suggest the ‘trade’ could approach the pattern targets.

That’s what I’m doing,

h 

Market Signals for

06-27-2017

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