Professor’s Comments May 23, 2017
Posted by OMS at May 23rd, 2017
The Dow rose 90 points yesterday, closing at 20,895. Volume was low, coming in at 87 percent of its 10-day average. There were 142 new highs and 21 new lows.
It’s starting to look like Wave ‘C’ down of the sideways triangle completed last Thursday at the 20,553 level, and that everything since has been part of Wave ‘D’ up. If so, the Dow should move a bit higher, maybe to the 21,000 level, before pulling back for Wave ‘E’. This analysis assumes that a sideways or rising triangle is completing.
If the pattern turns out to be a symmetrical triangle, then Wave ‘D’ up could be nearing completion at current levels. We’ll see.
There is also a smaller possibility that Wave ‘C’ down is still not complete, and that the move off the 20,553 low is part of a sub-wave within Wave ‘C’ down.
This is the problem with trying to trade or analyze triangles. There are way too many sub-waves!
The only thing we know for sure is that they have 5 major waves. And it will take time, probably another 3-4 weeks of sideways trading before all the waves are complete. I’m still estimating about mid-June. After that, the Dow and SPY should have a nice rally into September-October.
A break of 21,169 on the Dow will confirm that the summer rally has started.
Yesterday’s Sector Report had 7 strong sectors and 14 weak. The Semis, Leisure, Computers, and Insurance Sectors continue to show strength with Autos, Specialty Banks, Real Estate, and Telecoms lagging. As long as the weak Sectors continue in the majority, it’s likely the Dow and SPX will remain in the triangle.
Gold is another thing. I’m on a Buy signal for gold. Yesterday GLD rose 0.50 to 119.9. This caused the VTI on GLD to close at 52.92, so now the VTI is moving up with a positive bias (above 50). Yesterday the 2-period RSI closed with a slightly overbought reading of 81.83, so with the 35-period CCI still showing No Trend (16.53), it’s likely the ETF will pull back today to continue its ‘Blade’ development along the moving averages. Once the ‘Bade’ completes, probably in a few days, look for the ETF to start shooting higher.
Students should pay attention to the 35-period CCI on GLD. A CCI reading above 100 would signal that wave 3 up is underway. Once this starts to happen, look for mining stocks and ETFs, like GDX and GDXJ, to move higher. Also, IF the 2-period RSI moves below the 30 level on any pullback now, I would view it as an opportunity for a Rifle Trade.
That’s what I’m doing,
h
Market Signals for
05-23-2017
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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