Professor’s Comments July 20, 2016

Posted by OMS  at July 20th, 2016

The markets were mixed yesterday.  The Dow rose 26 points, closing at 18,559.  The NASDAQ and Russell 2K were down 19 and 7 points respectively.  Volume on the NYSE was low again, coming in at 87 percent of its 10-day average.  There were 159 new highs and only 2 new lows.

Not much changed with the indicators last night.  The Money Flow indicator on the NASDAQ (QQQ) turned negative, but most of the other indicators, including the VTI remain positive. 

At this point, the VTI on all four of the major indexes remains positive and in the Trend Mode.  As long as this indicator remain positive and trending, it’s likely the markets will continue to push slightly higher toward pattern targets.  These targets remain near 18,600 on the Dow and 2,180 on the SPX.

Students should understand that the current rally is being fueled in part by Central Banks trying to stimulate the European economy post-Brexit.  And even though this has caused the markets to move higher, the volume is extremely low.  Low volume, rocket ship rallies usually end badly.  However, until the indicators actually turn negative, it’s likely that the rally will continue.

Also, besides the low volume, while the Dow has moved higher during the past week, the A-D oscillator has been moving steadily lower.  On 12 July, the A-D oscillator has a reading of 193.36.  Yesterday it was down to 53.15.  A positive reading on the A-D oscillator means that most stocks on the NYSE are in up trends.  But the lower A-D oscillator reading tells me that fewer and fewer stocks are participating in the rally.  The low A-D oscillator reading is also occurring on the NASDAQ.  On 12 July, it reached a rally high of 211.21.  Yesterday it was down to 47.08.

Gold had a small bounce from oversold conditions yesterday, but not enough to get excited about.  With the market in a rally mode, gold has moved out of the spotlight.  I still believe the metal is headed a lot higher and continue to look for entry points.

That’s what I’m doing,

h

Market Signals for

07-20-2016

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