Professor’s Comments January 24, 2017
Posted by OMS at January 24th, 2017
The Dow fell 27 points, closing at 19,800. Volume was moderate, coming in at 92 percent of its 10-day average. There were 84 new highs and 14 new lows.
There was a small change in the A-D oscillator last night, so we need to be on the lookout for a Big Move within the next 1-2 days.
Other than the small change signal, not much changed with the cockpit indicators. They’re still mixed. The Tide remains negative, the Dean’s List is neutral, but the two pesky Money Flow indicators remain positive.
The thing that has me concerned now is the fact that the market hasn’t gone anywhere for the past six weeks. When the market moves sideways after it moves up (the post- election rally), its usually a sign that the market wants to move higher. So, with a small change signal on the board, tight Bollinger Bands, and mixed indicators, it appears some type of Big Move is coming, but the indicators haven’t confirmed the direction yet. In other words, the Big Move could be either up or down. Because of this, I’m on the sidelines until the indicators provide me with the information I need to trade the next major move.
It’s basically the same thing for gold. It’s the primary reason I took some money off the table yesterday by selling my shares of GDX.
With GLD overbought and in Non-Man’s Land between the 50 and 200, it’s likely that it too will need to consolidate before moving higher. Don’t get me wrong, I am still very Bullish on gold for the intermediate to longer term. But short-term, gold (GLD) needs to form a ‘Blade’ before moving higher. And if GLD is likely going to remain trapped between its moving averages for the next few weeks to form this ‘Blade’, I don’t see any percentage in holding GDX while the ‘Blade’ on GLD is forming. I never like to have my money at risk when the odds show little potential for gain. Besides, if I’m right about the consolidation in GLD, which I believe will be a small wave 2, I should be able to re-purchase GDX at slightly lower prices.
Last night’s sector report showed 15 strong and 9 weak sectors, so the sectors are still showing a slightly positive bias. The Semiconductors, Banks, Transports, and Financials continued to lead, with Retail, Service, and PharmaBio lagging. I’m still waiting for the indicators to confirm the negative VTI before placing my next sector ETF trade. Be patient.
That’s what I’m doing.
h
Market Signals for
01-24-2017
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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