Professor’s Comments November 19, 2014

Posted by OMS  at November 19th, 2014

The Dow rose 40 points, closing at 17,688. Volume was moderate, coming in at 93 percent of its 10-day average.  There were 183 new highs and  40 new lows.

Not much changed yesterday.  The markets still appear to be completing patterns that are associated with major tops.  It’s hard to tell when these patterns will complete, but it should be within the next week or so.

The breadth indicators continue to weaken, although yesterday’s rally did cause a small increase in the A-D oscillator.  The oscillator finished the day with a reading of 41.33.  This first sign of a change on Tide will be when this indicator falls below zero.

One of the indicators I look at periodically to tell me the health of the market is a custom indicator called the “Percent at New Highs”.  As you can see from the attached chart, this indicator peaked in late October with the Dow at the 17,390 level.  Since that time, the indicator has continued to fall telling me that fewer and fewer stocks are participating it the current rally.  This divergence is just another sign of an unhealthy market.

The Dean’s List, PT indicators, and The Tide all remain positive.  As long as these indicators remain positive, the markets will likely maintain their Bullish bias.

The metals had another strong day yesterday.  More and more gold and silver stocks and ETFs are appearing on the Dean’s List.  GLD rose a point moving back above the ‘Ropes’ on the 60s.  So now as long as it remains above the ‘Ropes’ it will continue to pull the 50 up towards the 200 enabling it to move into an Uptrend on the 60s.  This will be necessary if GLD is going to perform a ‘Rope Jump’ on the Daily Chart and start its Major Wave 3 up. 

It’s still very early in the process to tell if gold is really forming a bottom now.  However there is significant positive divergence in the P-volume at this point which should help GLD move higher. 

The  50 is almost ready to cross the 200 on the hourly chart of GDX, the Market Vectors Gold Miners ETF.  The ETF appears to be completing a small Hockey Stick Pattern on the 60’s.  If it pulls back so its 2-period RSI Wilder becomes oversold on the 60s, I’ll buy a few shares as a trade.  I’ll add to those shares IF the PT indicators on the Daily Chart turn Green.

Gold could be starting a significant Wave 3 up.  Like I said, it’s way too early to tell right now, but the larger pattern suggests significantly higher prices for gold, possibly near 1,900-2,500 level.  Because of this, I want to start accumulating a few gold shares, just in case the impulse wave is starting.  I’ll be using the shorter term bars for my entry points, and then IF the indicators on the Daily’s turn Green, I’ll start adding more.

Same for silver.  There are too many silver ETFs on the List now for me to ignore what the Dean is telling me.  The pattern and Band Squeeze for SLV on the 60s suggests that something could be ready to happen with the ETF.

That’s what I’m doing,

h

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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