Professor’s Comments June 14, 2016

Posted by OMS  at June 14th, 2016

The Dow fell 133 points, closing at 17,732.  Volume was moderate, coming in at 96 percent of its 10-day average.  There were 112 new highs and 38 new lows.

Yesterday’s decline was enough to turn all four of the breadth indicators that make up The Tide negative. This would tend to indicate that final Wave ‘C’ within Major Wave 2 up has truncated.  However, the Dean’s List remains positive, so the major market timing signals on the cockpit remain mixed.  Also, from a trading perspective, I can’t begin to buy inverse index ETFs until they start to appear on the Dean’s List.

Yesterday’s decline also caused the VIX to move significantly above its upper Bollinger Band.  In doing so, it generated a set-up for a VIX Buy Signal.  The actual Buy Signal will occur when the VIX drops below its upper Band, currently near the 18.48 level.

Gold stocks rallied as the market fell yesterday.  GLD was up 0.90 cents to 122.65; ABX was up 0.61 cents to 20.22.  It appears that gold has started its wave 3 up.  If this is the case, GLD could rally to the 133-134 level before wave 3 up completes.  However, UUP, the positive ETF for the U.S. Dollar has re-appeared on the Dean’s List. This is a very unusual event because in most cases, when gold rises, the Dollar falls.  So having UUP appear on the List is not what you would ordinarily see when gold is rising.

But as I mentioned this weekend in my WSR, these are NOT ordinary times.  The vote on the British exit from the EU will take place a week from this Thursday.  And most polls are starting to favor the ‘Leave’ side.  So if the UK leaves the EU, the Pound will likely continue to fall relative to the Dollar.  A ‘Leave’ vote could also cause gold to rise because of the turmoil it would create in world currency markets.  Like I said, these are not ordinary times.

Students should also note that while UUP is on the List, two of the three ETFs that normally appear on the List when the Dollar is strong (EUO and EEV) are also on the List.  However, YCS, the ETF for a weak Yen, is NOT on the List.  So right now, the signals for a strong Dollar are weak at best.

Because of this I’m being very cautious with my trading now and focusing on trigger trades.  However as long as gold stocks remain on the Dean’s List, I will continue to hold some gold. 

Summary of Trigger Trades:

Yesterday, a short in RLI Corp. (RLI) was triggered when the stock fell below 66.55. The stock hit a low of 65.46 before closing at 65.56.

The trade in Lidell Inc.(LDL) was not triggered as the stock never exceeded its trigger points.

The short in RLI was closed out at the end of the day for a profit of 0.98 cents.

So theoretically, if a student sold-short 500 shares of RLI at one tick below its low trigger point, and covered somewhere between the low point of the day and the close, they would have made a minimum profit of $490 before commissions. Max profit on the trade was $540 before commissions.

These trades are being shown so students can evaluate the performance and effectiveness of trading with trigger points. The results should not be considered as typical.  Actual results could vary considerably from the performance shown above.

Today’s Trigger Trades are: 

Boston Scientific (BSX): H 23.35, L 22.76

Matson Inc. (MATX): H 34.13, L 32.88

Materion (MTRN); H 25.75, L 24.70

The above trades are being shown for evaluation purposes only!

That’s what I’m doing,

h

Market Signals for

06-14-2016

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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