Professor’s Comments July 12, 2016
Posted by OMS at July 12th, 2016
The Dow had another strong 137 point intraday rally yesterday, but only finished up 80 points to close at 18,227. Volume was low, coming in at 82 percent of its 10-day average. There were 414 new highs and only 8 new lows.
Yesterday’s volume on the NYSE was lower than Friday’s volume of 83 percent, which was the lowest volume day of last week. In other words, as prices rise, volume is drying up. This is a sign that the rally is tiring.
However, the cockpit indicators remain positive. And as long as they stay positive, the rally can continue. The pattern target high was reached yesterday, so I would not expect prices to push much higher. A re-test of 18,284 is possible, but the volume will have to pick up significantly if prices are going to push much beyond that level. Right now I don’t see that happening.
The VTI closed with a reading of 67.2 while the 2-period RSI Wilder was showing a reading of 94.25. So the indicators continue to show an overbought market that is not in a trend. With the low volume conditions we’re seeing, the market is ripe for a pullback.
Gold (GLD) pulled back yesterday, dropping 1.23 points to close at 129.27. It’s VTI still showing a strong Up Trend, but now the 2-period RSI is 31.78. Hmmm? It’s getting very close to the 30 level which is where I’ll pull out my Rifle. My target for GLD on this rally remains at the 134+ level.
I found it interesting that GDX, the gold miners ETF, did not pull back yesterday and actually gained 0.06 cents to 30.6. The VTI on GDX is also showing a strong Up Trend, but the 2-period RSI is slightly overbought at 75.25. So I’m not interested in GDX. But the reason I mentioned it today is because ABX, one of the larger gold miners, also pulled back yesterday following GLD. And while the VTI on ABX is also showing a strong Up trend …as you would expect with GLD and GDX in strong Up Trends, its 2-period RSI fell to an oversold reading of 22.66. So IF I wanted to go mining today, I would have to look closely at ABX. It has a nice Hockey Stick Pattern on the 60s and is set-up for a Classic Rifle trade.
That’s what I’m doing,
h
Market Signals for
07-12-2016
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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Category: Professor's Comments