Weekend Strategy Review July 23, 2017
Posted by OMS at July 23rd, 2017
The Dow fell 32 points on Friday, closing at 21,580. It was down 57 points for the week. The NASDAQ finished down 2 points on Friday and up 75 points for the week. Friday’s decline caused the VTI on the DIA to turn negative. This was the first time this indicator has been negative since 7 July when the DIA was trading at 21,414. So now one of my key volume indicators and the VTI are negative. For this particular set of indicators, it means the Dow is now on a Sell Signal. Also turning negative on Friday was the DMI on the Dow. When I saw the negative DMI, I ran The Professor algorithm to see if he was would confirm the turn. He did not. He only had 15 shorts to go with 8 longs, which is far less than the 45-50 required for confirmation. By only highlighting 15 shorts, The Professor is also saying that he doesn’t see a new down trend starting. At least not yet anyway. A few days ago, when the DMI on the DIA turned positive, recall that I ran The Professor to see if he would confirm a new Up Trend. He didn’t. And in the 2-days the since the positive DMI turn, the Dow has fallen 29 and 32 points. That’s why I run The Professor. He tells me when a new trend is starting and keeps me from trading false DMI turns. So, even though the Dow is starting to show a few chinks in its armor, the other indexes, like the NASDAQ, SPX and RUT, are still positive. Also, The Dean’s List and The Tide remained positive after Friday’s session, so even if things are starting to change, it’s early. Friday’s Sector Report showed 17 strong and 7 weak sectors. Computers, Semis, Utilities, Healthcare and PharmaBio lead the strong sector list, with Housing, Autos, Retail, Energy, and Food-Drug lagging. There were large positive changes in Delta Trend Score yesterday for the Healthcare (111) and Insurance (127) Sectors on Friday. Large changes usually lead to a rally. Gold (GLD) rose 1.02 points on Friday. The VTI on GLD is now at 46.8 and rising. However after 2-period RSI is EXTREMELY overbought (99.0), so without a trend in place, the ETF could pull back early next week. If this happens, I will be looking to enter positions in GLD and other mining stocks and ETFs. Gold appears to be starting a short-term rally that should take it several points higher, before the next down wave begins. A few days ago, I mentioned that I was looking to establish a ‘trial’ position in XLE, the energy ETF. However because the 2-period RSI was overbought without a trend in place, I wanted to wait until the ETF pulled back. Friday’s pullback resulted in a 2-period RSI reading of 24.5, so the ETF is no longer overbought. I’ll be watching the short-term bars on Monday for entry points. Have a great weekend. That’s what I’m doing, h Market Signals for 07-24-2017
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All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.
Category: Professor's Comments, Weekend Strategy Review