Professor’s Comments September 1, 2016
Posted by OMS at September 1st, 2016
The Dow fell 53 points, closing at 18,401. Volume was high, coming in at 114 percent of its 10-day average. There were 116 new highs and 15 new lows.
Once again, yesterday’s decline was NOT impulsive, so it still appears that it was part of a corrective wave within final Wave ‘C’ to a top. With the August Jobs Report coming out tomorrow, we could see the final rally to the top take place next week to complete the Expanding Top Pattern.
The overall market continues to weaken, as evidenced by the divergence in the breadth indicators and the shortening of the Dean’s List. However, the pattern continues to suggest that Wave ‘C’ up is NOT complete yet and still needs at least one more rally before the final top is in.
In yesterday’s Comments, I mentioned that the VTI on the Dow and several of my algorithms were showing NO Trend conditions. So knowing that the Dow was not starting a down trend, I was watching the 2-period RSI Wilder on the Daily Chart to see if it would become EXTREMELY oversold. When it did I bought a few shares of DDM, the 2X positive ETF for the Dow. I plan to hold these shares through today, provided that the 2-period RSI does not become overbought intraday. I plan to be flat going into tomorrow’s Jobs Report, just in case something crazy happens.
BTW, going into today, the VTI on the Dow is still showing a neutral reading of 50.8 with the 2-period RSI at 23.5. In other words, the market is oversold with no trend in place. It should bounce.
During the next few weeks, as the market pushes toward its final top, students should watch the VTI/RSI combination. When the VTI is showing no trend, look for periods when the 2-period RSI is either overbought or oversold. The 2-period RSI Wilder is available intraday on most trading platforms with live data. The combination has been a very effective technique to identify scalp trades. Then once these scalp trades have been identified, use the shorter term bars as a trigger.
I also added a few shares to my gold and silver positions yesterday, basically for the same reason. The VTI on GLD was 31.1 and the 2-period RSI was an oversold 6.2. As long as the VTI on gold does not start trending to the downside, I will continue to look for opportunities to add shares.
While I’m very concerned about the overall market at this point, I’m still looking at the current pullback on the metals as a corrective wave within a Major Wave 3 up. This wave should take gold (the metal) to the 1,500 level before it completes. Gold is currently trading near 1,311. GLD closed at 124.78 yesterday, down 0.25 cents. I’m still looking for it to test the 135+ level once the current correction completes.
That’s what I’m doing,
h
Market Signals for
09-01-2016
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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