Professor’s Comments March 17, 2016
Posted by OMS at March 17th, 2016
The Dow rose 76 points, closing at 17326. Volume was moderate, coming in at 94 percent of its 10-day average. There were 98 new highs and 16 new lows.
Yesterday, the Fed announced that it was leaving short term rates unchanged. This caused stocks to rally after several days of sideways action in what appears to be the final wave or ‘through over’ wave of the Ending Diagonal Pattern. Once complete, the market should start to move significantly lower.
Bearish divergences continue to develop in the breadth indicators. However all of the indicators remain positive so the Dow could push a bit higher before the ‘through over’ wave completes.
It’s almost impossible to tell how high the final ‘through over’ wave of any Ending Diagonal Pattern will go before it completes. But looking at how the sideways trading of the past few days formed the ‘Blade’ of a small Hockey Stick pattern, it’s possible that the Dow could move another 100-200 points higher.
I still believe that this is not the time to be buying stocks as the reward-risk ratio continues to favor the downside. But with a small Hockey Stick Pattern in place that allows for higher prices, it’s still a bit early to be shorting stocks aggressively.
Gold and mining stocks rose sharply with GLD gaining 2.63 points to 120.59. In yesterday’s Comments, I mentioned that if gold was consolidating in a small wave 4 within Wave 1 up, it could rally to the 1300 level before pulling back to under 1200 during its Wave 2 retracement. Looking at how yesterday’s impulsive move up came after several days of sideways trading, I have to believe that it was the start of minor wave 5 up within Wave 1 up. If this is the case, GLD should rally to the 128 level before Wave 1 up completes.
Being patient.
That’s what I’m doing,
h
Market Signals for
03-17-2016
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
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