Professor’s Comments July 18, 2017

Posted by OMS  at July 18th, 2017

The markets were mixed to flat yesterday.  The Dow fell 8 points, closing at 21,630.  The NASDAQ finished up 2 points.  Volume on the NYSE was moderate, coming in at 95 percent of its 10-day average.  There were 155 new highs and 14 new lows.

Not much changed after yesterday’s trading.  While all the cockpit indicators remain positive, the negative divergence in breadth continues.  The VTI on the Dow remains in the Trend Mode, however that same indicator on the NASDAQ continues to show overbought conditions with No Trend in place.  This usually leads to a pullback.

The patterns on both indexes continue to suggest higher prices, possibly to 22,000+ on the Dow.  However the pattern also suggests the markets are in final wave ‘e’ up of a major Ending Diagonal.  Ending Diagonals can and do truncate, so we need to watch the indicators for any negative signs.

There was another small change signal in the A-D oscillator last night, so we need to be on the lookout for a Big Move during the next 1-2 days.  The last few small change signals were spot on producing 100+ point intraday moves both up and down.

Gold generated a new Buy Signal yesterday.  However, at this point it’s not clear that Major corrective Wave 2 down has ended.  The recent rally on GLD is occurring with the ETF in a down trend as defined by the 50 and 200 day moving averages.  So, while it’s likely that gold will rally from current levels, the rally might prove to be short lived. The reason I say this is because of the pattern appears to be developing into a complex zig-zag or 3-3-5 flat pattern.  If this is the case, the rally should be minor wave ‘c’ up of B up. Then once this wave completes, final Wave ‘C’ down should take gold lower to complete the pattern.

It’s possible (likely) that GLD will rally from current levels near 117 to about 125 before falling to about 105 before Wave ‘C’ of Major Wave 2 down completes.

Same or silver.  SLV also generated a Buy Signal last night and the pattern suggests a rally from current levels to about 17.5.  If this happens, it increases the odds for a pullback to about 14 before Wave ‘C’ down of Major Wave 2 down completes.

I still don’t believe the Major Wave 3 rally in gold will start until later this fall.  Gold still has a lot of work to do.

Monday’s Sector Report showed 14 strong and 10 weak sectors.  Semis, Computers, PharmaBio, Financials, and Material lead the strong sector list, with Retail, Telecoms, Food-Drug, Energy, and Service lagging.  The Telecoms had a large positive Delta Trend Score yesterday (104), which usually leads to a rally. 

That’s what I’m doing,

h

Market Signals for

07-18-2017

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