Professor’s Comments September 20, 2016
Posted by OMS at September 20th, 2016
The Dow fell 4 points in volatile trading, closing at 18,120. At one point yesterday, the Dow was actually up over 130 points. Volume was low, coming in at 85 percent of its 10-day average. There were 67 new highs and 15 new lows.
Traders appeared to be waiting to see what the Fed will do on Wednesday. Like I said in my WSR, I don’t expect they will do much to change interest rates with the election less than 50 days away.
Yesterday’s trading action did not produce any changes to the cockpit indicators. The Dean’s List is still neutral and the Tide is negative. QQQ is keeping the Dean’s List from turning negative, and that’s mostly because of Apple (AAPL). The stock fell 1.34 points yesterday to 113.58.
APPL appears to be completing a five wave sequence it started on 22 May from the 90 level. Wave 4 of the sequence completed on 12 September at the 105 level. The subsequent wave 5 rally has taken the stock to yesterday’s high of 116.18.
Here’s the thing. Apple is on all three of the major indexes; Dow, NASDAQ, and S&P500. It has been the one stock that is keeping the cockpit indicators and the Dean’s List from turning negative. If Apple starts to decline in the days ahead, it will take all of the major indexes with it. Watch APPL!
The VTI on APPL is currently in the Trend Mode with a reading of 77.99. As long as the VTI stays above 70, Apple and the overall market should remain well bid. However, IF the VTI starts to move under 70, it will be very negative for the overall markets.
Gold continues to form what appears to be a sideways triangle. Yesterday GLD rose 0.26 cents to 125.32 bouncing off the lower trend line of the triangle. So once again we saw how an oversold RSI and NO Trend on the VTI produced a bounce.
One of the stocks I’m watching today is Gulfport Energy (GPOR). The reason is because the VTI on GPOR is currently showing NO Trend (38.41) with the 2-period RSI buried in oversold territory at 1.68. So the stock is EXTREMELY oversold with no trend. One of the reasons I noticed the stock is because I saw DUG, the inverse energy ETF at the top of the Dean’s List.
Now normally, when I see something like DUG near the top of the Dean’s List, I would automatically assume that energy is weak. But in this case, DUG is the strongest of a very weak lot. And when I looked at the VTI on DUG, its showing No Trend (61.6) but the 2-period RSI is slightly overbought at 73.87. Hmmm?
So IF DUG pulls back in the next day or so, it could cause a pop in GPOR.
Remember the oil barons are meeting in Algiers next week. If their side meetings result in a few deals, energy prices could start to firm. The charts still suggest that we could see crude prices above 60 in the near future. All of you know that I like to trade energy starting around March. But this year, with so many oil producing nations hurting big time, the energy trade could come a bit earlier. I saw an article yesterday that said 15 percent of the people in Venezuela are eating garbage. If this is true, there’s gonna be a lot of pressure on the Saudis to cut production.
Trading gold and watching energy.
That’s what I’m doing.
h
Market Signals for
09-20-2016
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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