Professor’s Comments May 2, 2017
Posted by OMS at May 2nd, 2017
The Dow fell 27 points yesterday, closing at 20,913. Volume was low, coming in at 88 percent of its 10-day average. There were 180 new highs and 43 new lows.
Not much changed after yesterday’s trading, and today’s comments are similar to those in the WSR.
The Money Flow indicators continue to weaken which probably means that a triangle is forming on the Dow and SPX. The chart I presented in Saturday’s WSR depicts the most likely pattern for the triangle. Until 21,169 is broken to the upside, this will remain my primary scenario.
So, until, late May or early June, it’s likely the markets will remain in a trading range as the final three waves of the triangle develop.
The triangle on the S&P should trade between 2340 and 2390 until the pattern completes. After that, the S&P should break above 2390 and start its rally toward 2500+ into the fall. The triangle pattern for the Dow is not as developed as it is on the SPX, but I’m going to use 20,500 and 21,100 as my trading range targets.
Yesterday’s Sector Report continued to weaken. The report had 15 strong sectors, two less than Friday’s report, and 9 weak. The Semiconductors, Leisure, Computer, and FoodDrug Sectors continue to lead, with Energy, Media, BanksSP, and Autos lagging. The last three weak sectors mentioned all had large negative Delta Trend Scores yesterday. So, IF the Dow and SPX start to head lower, it’s likely that Media, Specialty Banks and Autos will lead the way lower.
Again, I don’t expect much of a correction as the triangle forms, maybe 300-350 Dow points from current levels. But if the Money Flow indicators continue to weaken, the decline could be more. I still plan to use 20,500 and 21,100 as my trading range targets.
Gold and mining stocks continued to pullback yesterday. GLD fell 1.1 points to 119.67. My target for GLD remains near the 117.5-118.5 level. My target for GDX remains near 21. Yesterday GDX closed at 21.69. I’m starting to see positive divergence in the Money Flow indicators for both ETFs.
Remember, GLD is now in an Uptrend with its 50 above the 200. So, continue to watch the 2-period RSI for oversold conditions. Yesterday the 2-period RSI on GLD closed with a reading of 17.1. In other words, GLD is now a Rifle Trade candidate on the short-term bars.
That’s what I’m doing,
h
Market Signals for
05-02-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS |
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Category: Professor's Comments