Professor’s Comments July 8, 2016

Posted by OMS  at July 8th, 2016

The Dow fell 23 points, closing at 17,896.   Volume was low, coming in at 86 percent of its 10-day average.  There were 137 new highs and 20 new lows.

The BLS will be releasing the June Jobs Report at 8:30 am this morning.  Given that last there was a small change in the A-D oscillator last night, the report could produce a Big Move in the markets within the next 1-2 days.

Most analysts expect the June Report to show a rebound to 175,000 non-farm payrolls, from May’s horribly weak 38,000.  The weak May number was the primary reason the Fed left interest rates unchanged at its meeting last month. If the June report confirms the slowing Jobs number or shows it to be an anomaly, it will likely impact the markets in the weeks ahead.

I usually like to stay on the sidelines before the Jobs Report because you can never tell how the market will react to the news.  Last month’s report was exceptionally bad, so if it proves to be an anomaly, it could trigger a final rally that will test the April highs.  On the other hand, if we get another bad report, it could trigger the decline that I have been expecting from the large Broadening Top Pattern.  We’ll see. 

Last night the VTI on the Dow was showing a positive bias with No Trend in place.  The 2-period RSI Wilder had a neutral reading of 56.18.  In other words, the indicators are saying the market can go either way from here. 

In yesterday’s Comments I talked about how Greenbriar (GBX) was oversold without a Trend in place.  And because of this, I was expecting it to pop.  That’s exactly what happened.  Yesterday GBX closed up 2.15 points at 28.28 and is now priced where I believe it is an attractive short once the PT indicators on the short-term bars give say so.

One of the things students should note is that there are No stocks highlighted for today’s Honor Roll.  This is because Emeritus is a Trend Algorithm, and without a trend in place, he’s basically telling you not to trade. With No Trend and an RSI showing a neutral reading, the odds for a successful trade are low. 

With the Dow only about 200-300 points from where I believe it will top, the thing I’m watching now is the VTI and The Tide to turn negative.  If they do, this is where I would expect Emeritus to get active and start highlighting many stocks for the Honor Roll. This is when I believe the odds will shift heavily in our favor for the next major move. Not now.

BTW, GLD pulled back yesterday from overbought conditions on its 2-period RSI.  It’s VTI is still showing a strong Up Trend, but its 2-period RSI only pulled back to 65.39.  The Money Flow indicators are still very positive.  So IF the market reacts positively to the Jobs Report, you could see GLD and other gold stocks pull back a bit more.  If they do, and the 2-period RSI becomes oversold on the Daily chart, I’ll be polishing my Rifle.

Waiting for the Jobs Report.

That’s what I’m doing,

h

Market Signals for

07-08-2016

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