Professor’s Comments February 17, 2017
Posted by OMS at February 17th, 2017
The markets were mixed yesterday. The Dow finished up 8 points at 20,620. The SPX and NASDAQ were down 2 and 5 points respectively. Volume on the NYSE was moderate, coming in at 106 percent of its 10-day average. There were 201 new highs and 12 new lows.
Today is the second day after yesterday’s Fibonacci Phi Mate turn date. Stocks basically paused yesterday which is what you often see just before they start to turn down. Both the SPX and NASDAQ had inside days, which is another indication that those markets could be about to turn.
Today is also the second day of the small change signal from the A-D oscillator, so we could see a Big Move today.
Yesterday I talked about how the market has rallied impulsively since 7 February when the VTI on the Dow re-entered the Trend Mode. This impulsive rally was likely Wave 3 up of a five-wave sequence to a top that will likely occur in mid-March. So, IF the market starts to head down today, it will likely be Wave 4 down of the Ending Diagonal, with one more final wave (Wave 5 up) required before the pattern is complete. This is what the wave count in a typical theoretical pattern would suggest.
But Fibonacci wave counts do not always follow theoretical patterns. They can and often do morph into other patterns. That’s why we use indicators in the Professor’s Methodology. The indicators track what the market is doing.
Yesterday’s small rally caused the Dow to remain above its Upper Bollinger Band, so the set-up for a Bollinger Band Sell Signal was still NOT triggered. The Russell 2K small cap index closed back under its Upper Bollinger Band, so another Bollinger Band Sell Signal was triggered for the small cap index. A Bollinger Band Sell Signal was also triggered for the SPX and NASDAQ.
BTW, yesterday I received an email from Laura L. asking why I don’t comment on the NASDAQ as often as I do about the Dow and gold. I thought it was a great question, so I thought I would share the answer with everyone this morning. Here’s what I wrote Laura:
“Thank you for your email. The reason I don’t spend a lot of time talking about the NASDAQ is because the NASDAQ, SPX and Dow have been acting almost the same. All three have similar patterns (Ending Diagonals), so when I Comment on the Dow, it pretty much applies to the other indexes too. The pattern on the Russell is somewhat different. It is not as strong as the other indexes, so it should be the first to turn negative.
If you recall a few weeks ago, the ETF for the inverse Russell 2K (TWM) started to appear on the Dean’s List when all the positive index ETFs for the DOW, SPX, and NASDAQ remained on the List. This is why I started talking about the inverse Russell. If the inverse NASDAQ ETF (QID) starts to appear on the List, I’ll mention it too.”
Yesterday’s Sector Report showed 19 strong sectors and 5 weak. The Transports, Semiconductors, and Banks continue to lead, with Service, Food, and Telecoms lagging. There were no large changes in Delta Trend Scores (DTS) . Large changes in DTS are usually a good indication that something is happening in a particular sector.
Gold (the metal) had another nice day yesterday. GLD rose 0.63 cents to 118.08. GDX rose 0.27 cents to 25.2. The VTI on GLD and GDX remains in the Trend Mode, and has turned back up.
Yesterday’s small pop in GLD caused its price to move back above the 200-day moving average. So, if GLD continues to trade above the 200, it will continue to pull the 50 up toward the 200. The 50-day moving average on GDX moved above the 200 two days ago, so IF GLD, the underlying index for the miners, can move into an Up Trend, like many of its subordinates have already done, it would be very nice for the metals.
BTW, shares of DIG got clobbered yesterday after the oil inventory numbers were released. DIG has not been on the Dean’s List since 5 January when it was replaced by DUG. DUG was trading at 36.76 on 5 January; now it’s at 40.6. DUG has traded as high as 42.37 on this run.
With the favorable March-April time for trading energy only two weeks away, l continue to watch for DIG to re-appear on the Dean’s List. Even though DIG has been pulling back for the past month, the ETF remains in an Up Trend. Also, during the pullback, the ETF has formed a TLB Pattern. The Money Flow indicators are still positive, but the VTI is still showing a negative bias. As a matter of fact, the VTI on DIG is almost ready to enter down trend territory (30.8). As a minimum, I need to see the VTI move above 50 before I become interested in energy. Calendar or no calendar.
That’s what I’m doing,
h
Market Signals for
02-17-2017
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