Weekend Strategy Review July 30, 2017

Posted by OMS  at July 30th, 2017

The markets had another mixed week.  The Dow continued its advance, rising 34 points on Friday, closing at 21,830.  It was up 284 points for the week.  The NASDAQ continued its decline, finishing down 8 points on Friday and down 20 points for the week. The S&P500 was also down 3 points on Friday and flat for the week.  Last week’s big winner was Boeing, which was up 29 points for the week.

Not much changed with respect to the overall patterns.  The Dow, SPX, and NASDAQ are all finishing large degree Ending Diagonal Patterns. 

Breadth on the NYSE continues to diverge from price, a classic sign of a tired market.  Yesterday, the Summation Index and the Hi-Lo indicator, two of the breadth indicators that make up The Tide turned negative.  So now 3 of the 4 Tide indicators are negative.  The lone positive holdout is the Up-Down Oscillator.

One thing to note from Friday’s action was that there were over 370 more declining issues than advancers on the NYSE, even though the Dow was up 34 points.  If the breadth continues to deteriorate next week, I would expect The Tide to turn negative.  And IF The Tide turns negative with the Ending Diagonal Patterns looking complete, I would expect the markets to start a decline to where the patterns began.

QID, the inverse index ETF for the NASDAQ, appeared on The Dean’s List after Friday’s session. So now the Dean’s List is neutral.  The combination VTI-volume indicator remains on a Sell Signal for the NASDAQ.  This same combination signal is still positive for the Dow.

Now that QID is on the Dean’s List, with a pattern, and indicators suggesting a decline in the NASDAQ, I will star looking for opportunities to establish short or inverse positions in technology.

There was also a very small change in the A-D oscillator on Friday, so we need to be on the lookout for a Big Move early next week.

Friday’s Sector Report showed 17 strong and 7 weak sectors.  Service, Computers, Utilities, Semis and Material lead the strong sector list, with Autos, Housing, Transports, Retail, and Real Estate lagging.  The Energy Sector has appeared on the strong list and is moving up.  The insurance sector had a large negative Delta Trend Score on Friday (-118).  Large negative DTS changes usually precede significant price declines in the sector. 

Gold (GLD) rose 0.90 cents on Friday to 120.69.  The VTI on GLD is now at 63.03 and rising.  Since the VTI on GLD turned positive, the ETF is now up over 4 points. Gold appears to be in a short-term rally that should take it several points higher, before the next down wave begins.  My current target for GLD is the 125 level.  After that, GLD could decline to 104-105 before wave 2 down completes.

DIG and XLE, the two energy ETFs I trade, have now moved above their 50-day moving averages and appear to be forming a ‘Blade’ that should help them move toward the 200.  If they can perform a ‘Rope Jump’ in the next 5-7 days, it would be very Bullish for energy.

Have a great weekend.

That’s what I’m doing,

h

Market Signals for

07-31-2017

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