Professor’s Comments January 20, 2017
Posted by OMS at January 20th, 2017
The Dow fell 72 points, closing at 18,732. Intraday, the Dow was down 126 points. It was the Big Move predicted by the small change in the A-D oscillator. Volume was moderate, coming in at 96 percent of its 10-day average. There were 81 new highs and 23 new lows.
Yesterday’s decline caused the Tide to turn negative. However, several of the other cockpit indicators remain mixed. The two Money Flow indicators remain positive and as long as money continued to flow into the market, the Dow could still make another run toward 20,000. I’m still on the sidelines.
The VTI on the Dow continues to head down and now has a reading of 64.86. So, it’s no longer in Trend territory. But last night the 2-period RSI closed with an EXTREMELY oversold reading of 3.2. So, with no trend in an oversold market, it’s likely the market will bounce today. It will be the extent of this bounce that will likely determine the next major directional trend of the market.
I ran The Professor algorithm again last night to see if he could provide any insight into the next developing trend. He only had 15 longs and 9 shorts, so he’s not seeing anything.
Same for the Sectors. With 18 strong Sectors and only 6 weak, the market still has a strong upside bias. The Banks, Semiconductors, Transports, and Financials continue to lead, with Service, PharmaBio, Household and Healthcare lagging. None of the Sectors are strong or weak enough for me to initiate a Sector Trade.
I’m still concerned about the narrow Bollinger Bands on the major indexes. These narrow Bands continue to suggest that a big move is coming. After yesterday’s decline, it started to look like the big move would be to the downside. However, the sideways trading action I mentioned yesterday that caused the Blade’ of a Hockey Stick Pattern to develop still has me concerned. This ‘Blade’ can easily support one more thrust higher. With mixed indicators on the cockpit and a potential ‘Blade’ developing, I still believe the odds for a successful longer term trade are only about 50-50.
I don’t like trading with 50-50 odds. Trading is tough enough even when the odds for a successful trade are favorable. When they’re only 50-50 as they are now, if I force a trade, it usually doesn’t work out well.
Most gold stocks continued to pull back yesterday in response to the overbought conditions that were apparent 2-days ago. These overbought conditions have now been resolved. A few days ago, I talked about how GLD was in No Man’s Land, between the 50 and 200 day moving averages and how it needed some time to develop the ‘Blade’ that will enable it to move higher. Yesterday’s decline to the 50 was its first pullback in the development of the ‘Blade’. Students should now watch how the ‘Blade’ continues to form between the 50 and 200 in the days ahead. The development of a strong ‘Blade’ will be extremely to GLD if gold and other mining stocks are to move significantly higher in the months ahead.
That’s what I’m doing,
h
Market Signals for
01-20-2017
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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
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Category: Professor's Comments