Professor’s Comments November 1, 2016
Posted by OMS at November 1st, 2016
The Dow fell 19 points, closing at 18,142. Volume was moderate, coming in at 103 percent of its 10-day average. There were 59 new highs and 80 new lows. Notice how the number of new lows is now exceeding the number of new highs?
Not much changed with the major indexes after yesterday’s trading action. The Dow continues to trade within a sideways triangle bounded by 18,050 and 18,350. A move below 18,050 will likely see the Dow fall to the 17,700 level to complete wave ‘D’ down. The best fit for the overall pattern is for wave ‘D’ down to complete just prior to the election followed by a post-election rally to new highs to complete wave ‘E’ up.
Last night I noticed that TBT, the inverse 20+ year Bond ETF was at the top of the Dean’s List. The ETF replaced TLT on the Dean’s List on 16 August to identify the start of a 3-3-5 corrective zig-zag pattern for Bonds. As the pattern developed, TBT continued to strengthen as Bonds weakened, working its way to the very top of the Dean’s List.
But now, all 5 waves of wave ‘C’ of the corrective pattern appear to be complete. If during the next few days, TBT starts to move down on the List and is replaced by TLT, it will likely mark the beginning of a significant move up in Bond prices. That’s right! The zig-zag pattern is suggesting higher Bond prices which means lower Bond yields. This does NOT fit in with what the Fed has been saying about the economy which has Wall Street looking for an interest rate hike in December. Hmmm?
Bond yields are determined by the market and NOT the Fed. The Fed only controls short-term interest rates on money they loan to Member Banks. This is a lot different than interest rate on Treasury Bonds, which are traded in the real world. If Bond prices start to rise now after completing the ‘C’ wave of an a-b-c zig-zag, it would tell us that the economy is a lot weaker than what this political Fed is saying. So watch for TLT to appear on the Dean’s List. If it does, it would be a bad omen for equities.
Same for gold. GLD continues to strengthen, gaining 0.36 cents to 121.94. The Bollinger Bands on GLD continue to tighten and are now EXTREMELY tight. Tight Bands usually mean a Big Move is coming.
I continue to watch for GLD to test the 50-day moving average now at the 123.2 level. If this test is successful and GLD breaks above the moving average, it would constitute a ‘Rope Jump’. Right now, the 50 is above the 200, so technically, GLD is already in an uptrend. It doesn’t have to be slowed down or pull back to develop a ‘Blade’ so the moving averages can cross. They have already crossed to the positive side. IF GLD can move above 123.2 now, it can move higher very quickly.
My target for the next move in GLD remains at the 135+ level. Watch gold and mining stocks in the days ahead. The gold train could be starting impulse wave 3 of 3 up.
That’s what I’m doing,
h
Market Signals for
11-01-2016
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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Category: Professor's Comments