Professor’s Comments August 4, 2016

Posted by OMS  at August 4th, 2016

The Dow bounced from oversold conditions yesterday.  This is what usually happens when the 2-period RSI Wilder becomes EXTREMELY oversold (0.48) without a Trend in place. 

The bounce was not enough to change any of the cockpit indicators. Volume was moderate, coming in at 104 percent of its 10-day average.  There were 98 new highs and 16 new lows. 

The Tide remains negative and the Dean’s List remain positive.  The DMI on the Dow is negative, but continues to be positive on the NASDAQ.  All of the Money Flow indicators remain positive.  So with mixed indicators, I’m still mostly on the sidelines.

The BLS will be releasing the July Jobs Report at 8:30 tomorrow morning.  Because the report can result in large price moves, most traders will likely remain on the sidelines today.

The VTIs on the various markets I track remain mixed.  The VTI on the Dow continues to head down and is now in neutral territory.  This is why yesterday’s bounce occurred (overbought RSI and no trend). The VTI on the NASDAQ has turned back up and is still in the Trend Mode.  The VTI on the SPX is heading down, but close to moving out of the Trend Mode.  So from a VTI perspective, I’d have to say they’re mixed.  I’d really like to see all of the VTIs moving down before I start getting aggressive with my short positions.

At this point, I’m not worried about missing the train south.  If I’m right about the pattern, the next leg down should drop the SPX to the 1,990 level, possibly lower.

Yesterday I received an email from Brad R. asking about the pattern on the SPX that projects a decline to 1,990.  The pattern, which looks like a megaphone, is called a Broadening Top or Expanding Top.  If you connect the three tops and the 2 low since April, you will see the pattern.

Gold pulled back a bit yesterday.  The decline appeared to be normal, healthy breathing in an advancing market.  GLD has now advanced about 4 points off the Blade of a small Hockey Stick pattern and is at the Upper Bollinger Band. At this point, it might need to rest before it gains enough strength for its final push higher. The VTI on GLD remains positive and in the Trend Mode.  BTW, if you look at Tuesday’s overbought 2-period RSI Wilder on GLD, you will see the reason for the pullback.  Also, if GLD continues to pullback today and the RSI becomes oversold, I’ll be looking to add shares with a Rifle Trade. 

I will be on traveling to the West Coast later today, so I will not be posting Comments on Friday.  My next posting will be the Weekend Strategy Review.

That’s what I’m doing.

h

Market Signals for

08-04-2016

One hour video recorded from May 28, 2016 The Professor’s Signs of a Major Market Turn – Prospectives and the Projected Timing and Levels One hour streaming video – includes webinar handouts The Professor usually holds an update class whenever the Market looks like it may be making a major turn. If you have been following the Professor’s Comments you know that a turn is due….. LEARN MORE

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ

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.