Professor’s Comments July 28, 2016

Posted by OMS  at July 28th, 2016

Stocks were mixed again yesterday.  The Dow rose 68 points early in the session, then fell closing down 2 points at 18,472.  The S&P500 was down 3 points, but the tech heavy NASDAQ finished strong, closing up 30 points. Volume was heavy, coming in at 123 percent of its 10-day average.  There were 226 new highs and 9 new lows.

Yesterday was a strange day on the NASDAQ because even though the index was up 30 points, declining issues outpaced advancers by almost 2:1.  Like I said, very strange!

As expected, the Fed decided not to change interest rates yesterday.  It looks like they don’t want to rock the boat going into the November election.  Hmmm?  Isn’t the Fed supposed to be non-political?  With last month’s good jobs report and the market near record highs, if the economy was as strong as the politicians say, you would think the Fed would be raising interest rates. But not this Fed. They know that any increase in interest rates now will likely cause a significant decline in equities, and there’s no way that Ms. Yellen wants that to happen on her watch.

But despite yesterday’s inaction by the Fed, the transportation sector got clobbered having its second biggest one-day loss of the year.  So while the industrials remain strong, the transports are now starting to show major divergence.  This is the Classic Dow theory sell-signal.

Yesterday’s small decline in the Dow and SPX caused The Tide to turn neutral again. Only this time it was the Summation Index and the A-D oscillator that turned negative.  The Hi-Lo indicator and Up-Down oscillator remain positive.  When the A-D oscillator turns negative, it’s usually something to note, as it means that most stocks on the NYSE are starting to move down. This contrasts with the A-D oscillator on the NASDAQ which remains positive and actually rose yesterday.  The VTI on the Dow continued to decline but remains in the Up Trend mode.  The Money Flow indicators remain positive.  So the indicators for equities continue to provide mixed signals.

Not so much with the indicators on gold.  GLD broke out of its ‘Hockey Stick’ pattern yesterday by rising 2.03 points.  The VTI turned positive. 

Yesterday when I talked about gold, I said that it’s usually a good time to establish a trade whenever a stock is in a trend (the moving averages are showing Railroad Tracks) and the 2-period RSI is oversold.  This is what produced yesterday’s 2-point pop in GLD. 

But I also pointed out that its usually an even better time to trade gold when there is divergence in the oversold RSI.  I said an oversold RSI usually leads to a technical pop, but divergence in the RSI usually leads to a rally.  So now that GLD popped for over 2-points yesterday, let’s see if GLD will start to rally.  The pattern continues to suggest a move toward the 135+ level.  And now the VTI is positive to support the pattern.

Trading gold.

That’s what I’m doing,

h

Market Signals for

07-28-2016

One hour video recorded from May 28, 2016 The Professor’s Signs of a Major Market Turn – Prospectives and the Projected Timing and Levels One hour streaming video – includes webinar handouts The Professor usually holds an update class whenever the Market looks like it may be making a major turn. If you have been following the Professor’s Comments you know that a turn is due….. LEARN MORE

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The Hockey Stick Pattern
The Creation of Waves and Trends
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