Professor’s Comments January 24, 2018
Posted by OMS at January 24th, 2018
The markets were mixed yesterday. Large cap technology stocks rose sharply while the small cap stocks on the RUT, and SPX were mostly flat. The Dow finished down 4 points, closing at 26,211. The NASDAQ and SPX rose 52 and 6 points, respectively. Volume on the NYSE was moderate, coming in at 98 percent of its 10-day average. There were 292 new highs and 27 new lows.
Not much changed with the indicators yesterday. Everything is still positive on the cockpit and the Sector Ratio remains strong. Continue to ride the horse. Stay in stocks and ETFs in the strong sectors and avoid those in weak sectors.
Yesterday’s Sector Ratio increased to 23-1 positive. That’s EXTREMELY positive! The only weak sector is the Utilities. The strongest sectors are Retail and Healthcare, followed closely by FoodDrugs, Specialty Banks, Transportation, Services, Media, Energy, Material, and Leisure. With sooooo many strong sectors, I must expect the rally to continue.
Gold and most mining stocks rose modestly again yesterday. GLD rose 0.63 cents to 127.28. The 2-period RSI rose to an overbought reading of 90.14, but GLD remains in an Up Trend, so it will likely push higher. My VTI-volume indicator on GLD remains on a Buy Signal. It still appears that GLD will test the 135 level on this leg up, just don’t expect the rally to be straight up.
My Rifle Trade on GDX rose another 0.39 cents yesterday to 24.10. My combination VTI-volume indicator on GDX remains on a Buy Signal, but the 2-period RSI is now overbought at 86.77. So, IF gold pops this morning, I’ll be taking profit on the Rifle Trade and holding my Basic Position. Remember, we don’t get greedy with Rifle Trades. We use these trading opportunities to supplement profits from the basic position, buying additional shares when the 2-period RSI becomes oversold and selling them when it becomes overbought. With an RSI reading of 86.77, GDX is now in overbought territory.
BTW, if you DON’T have a Basic Position in gold, but bought a few shares of GDX the last time the ETF was oversold (on 18 January), you can use the shares you bought with the Rifle Trade as your Basic Position. Just remember that you still must manage your money on these shares. Whenever I do this, I just take a few shares off the table to protect the profit, and then look to re-establish the position with a Rifle Trade the next time the 2-period RSI becomes oversold. Gold is NOT going to the moon on this leg up. It will pullback. Whenever I see a stock in an Up Trend (50>200), I establish a Basic Position and then use Rifle Trades to buy additional shares when the 2-period RSI becomes oversold, then sell them when it becomes overbought.
Remember too that a Rifle Trading Position is never more than half the Basic Position. So, IF my Basic Position is 1,000 shares of GDX, I only trade 500 shares with the Rifle.
I’m still thinking gold (the metal), currently trading near 1,337, will approach the 1,400 level on this leg up. After that it should pullback to about 1,325 before rallying to 1,450 or so to complete wave ‘B’ up. Then once wave ‘B’ up completes, gold should fall to 1,100 as wave ‘C’ down unfolds. In other words, I’m bullish on gold for the next few months, probably into mid-summer. But after that, gold will likely fall as the Dollar begins to rally. As long as UDN (the inverse ETF for the Dollar) remains on the Dean’s List, I’m Bullish on gold.
That’s what I’m doing,
h
Market Signals for
01-24-2018
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 |
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