Professor’s Comments September 23, 2016
Posted by OMS at September 23rd, 2016
The Dow rallied for another 99 points yesterday in a strong follow through after Wednesday’s Fed meeting. Volume was moderate, coming in at 95 percent of its 10-day average. There were 155 new highs and only 2 new lows.
The rally pushed the Dow and SPX to the targets I mentioned in yesterday’s Comments. So now, with the Dow and SPX having tested the 18,450 and 2,180 levels, I’m just going to wait to see what happens today.
After yesterday’s trading, all of the cockpit indicators are positive. However, the 2-period RSI on the Dow is extremely overbought at 96.77 and the VTI is showing No Trend at 45.4. In other words, the market should pull back today.
As I mentioned yesterday, when the Dow and SPX reached my projected targets, I established a small ‘trial’ position in DXD and SH. So depending on what happens today, I will be looking to add to those positions. But I plan to do it cautiously.
I never like to trade against the cockpit indicators, and this time is no exception. Especially when The Professor came in with a bunch of longs last night that suggests the rally still has more room on the upside. So I’m probably just going to hold the few inverse ETF positions I have and wait for the indicators to turn negative before adding more.
Same for gold. Yesterday GLD rose 0.30 cents to 127.57. The 2-period RSI is now overbought at 95.94 with the VTI showing No Trend. So gold should also pull back today. Given that I believe gold is in a wave 3 up, if the pullback causes the 2-period RSI on the Daily chart to become oversold, I’ll be tempted to add to my positions. But once again, I probably won’t get too aggressive. I already have my Basic position in gold and gold stocks now, and would really like to see GLD break above 129 before adding to the position.
Remember, the 129 level in GLD is the top of the minor wave 4 triangle. As long as GLD stays below 129, it will likely continue to trade within the triangle, or between 124 and 129. So I already have enough money committed to something that is just trading sideways. For me to get aggressive with my gold trades, I want to see gold trading above 129. That’s when the fun will likely start. That’s also when we’ll likely see UUP and EUO move off the Dean’s List.
BTW, GPOR finally popped for 1.29 points yesterday, closing at 27.92. The stock got as high as 28.07. Once again, an oversold RSI with No Trend on the VTI produced a nice scalp trade. With DUG still on the Dean’s List, I took my profit and ran.
Bottom Line for today: I’m just going to wait and see what happens. The equity markets and gold are very overbought now and should pullback. It will be the extent of the pullback that will determine the next move. Be patient.
That’s what I’m doing,
h
Market Signals for
09-23-2016
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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Category: Professor's Comments