Professor’s Comments March 30, 2016
Posted by OMS at March 30th, 2016
The Dow fell over 100 points early, and then rallied just shy of 200 points after Fed Chair Janet Yellen hedged comments on rate increases to close at 17,633. Volume was moderate, coming in at 99 percent of its 10-day average. There were 204 new highs and 10 new lows.
Yesterday’s large opening decline followed by the 200-point intraday rally was the Big Move predicted by the relatively small change in the A-D oscillator.
The large intraday rally caused The Tide to turn positive again. This is not really that much of a surprise as the end-of quarter window dressing by the Mutual Funds will likely keep the market well bid for the next 2 days. It should also cause the Dow to re-test last Tuesday’s high of 17,649.
Even with yesterday’s strong rally, the Money Flow indicator on the Dow hardly moved. So the negative divergences in Money Flow and breadth continue. I still believe that once the current rally completes, the market will start a significant decline.
Gold rallied hard on Ms. Yellen’s comments with GLD closing up over 2 points at 118.76. The rally triggered a new Buy Signal in the Money Flow indicators on most of the gold stocks I watch. This tells me that that the recent pullback in gold was likely a minor wave 4 instead of Major Wave 2. This means that GLD could reach the 125-127 level before Major Wave 1 completes.
At this point, I’m still not anxious to buy and hold gold for the longer term, but I do find it very interesting as a trade. Looking at my trend indicators, it appears that GDX actually has a better chance of trending, so I’ll likely try a few scalp trades with that ETF as long as the breadth indicators on The Tide remain positive.
Trading for the next two days will be tricky, mostly because the positive bias from the end-of-quarter will likely end on Friday. So I don’t want to be holding a lot of stock going into the weekend.
Watching and waiting.
That’s what I’m doing.
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Category: Professor's Comments