Professor’s Comments November 22, 2016
Posted by OMS at November 22nd, 2016
The Dow rose 89 points, closing at 18,957. It reached a high of 18,961, and is now only 39 points from my trading target of 19,000. Volume was exceptionally low, coming in at only 77 percent of its 10-day average. There were 230 new highs and 41 new lows.
Yesterday’s rally was likely the Big Move predicted by the two consecutive small change signals from the A-D oscillator that were generated late last week. Back-to back small change signals are rare, so it’s likely the market will continue with its Big Move, especially considering the Bullish seasonality of the Thanksgiving Holiday period.
Students should realize that the current rally wave is likely final wave ‘c’ up of final Wave ‘D’ up, and that once this wave completes, the Ending Diagonal Pattern that began last February is likely over.
As I mentioned previously, my trading target for this rally is the 19,000 level. It’s likely that this target will be reached today. The theoretical target is the 19,200+ level, so it’s possible that stocks could rally to this level before starting to pull back.
From a timing perspective, the overall pattern should complete near the end of the month.
Something very important happened yesterday in the dollar-gold relationship. UUP, the ETF for the Dollar fell 0.10 cents to 26.09 and finally closed below its Upper Bollinger Band. By doing so, it generated an early Buy Signal for gold. However, UUP is still on the Dean’s List and the VTI for GLD is still heading up, so the full Buy Signal is still not in yet. But now that the UUP has closed below its Upper Bollinger Band, gold and mining stocks could start to rally.
Students should take note of how difficult it has been to trade gold these past few weeks with UUP on the Dean’s List. The same thing happens when trying to scalp trade gold and mining stocks during the day when the short-tern indicators on UUP are positive. When I’m scalping gold, I’m always watching the indicators on UUP to see if they are positive or negative. Trading the metals, even on a short-term basis, is a lot easier when you do this. Give it a try and you’ll see what I mean.
Students should also note that since DIG replaced DUG on the 15th, energy stocks have firmed. Whenever I see DIG replace DUG on the List, rather than trading the energy ETF which has a lot of junk in it, I immediately look to trade some of the highest rated energy stocks on the Member’s Watch List. On the 15th, the highest rated energy stock with the best-looking indicators was Marathon (MRO). Yesterday, the stock was up 0.86 cents to 16.46.
I’m still not convinced that the recent rally in energy is sustainable. For now, the rally is happening because most traders believe OPEC will establish production quotas by the end of the month. I wouldn’t count on it. We’ve seen the Saudi’s pull out of these meetings too many times before. Right now, it appears that two of the most reluctant oil producing countries, Iraq and Iran, are on-board for an agreement. However, if they or the Saudi’s pull out, crude oil and energy stocks could easily pullback to pre-rally prices. The current rally should last a few days longer. Just realize that we’re not dealing with fundamentals now; we’re dealing with the whims of a few oil producing countries. So energy stocks are still trades only.
I’m still mostly focused on gold, and to a much lesser extent Bonds. Some of my Bond indicators are starting to firm, but they are still a long way from generating a Buy Signal.
That’s what I’m doing,
h
Market Signals for
11-22-2016
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-T |
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Category: Professor's Comments