Professor’s Comments June 17, 2016

Posted by OMS  at June 17th, 2016

The Dow fell 169 points early, then came roaring back to close up 93 points at 17,733.  Volume was moderate, coming in at 103 percent of its 10-day average.  There were 110 new highs and 48 new lows.

Yesterday’s early decline to key support at the 17,485 level was the perfect spot for the VIX Buy Signal to kick in.  We see this happen a lot with VIX Buy Signals.  The signal occurs and then takes a day or so before it starts to take  effect, usually once key support is found.  However, because the cockpit indicators are still mixed, I don’t have strong odds for what will happen to the markets in the next week or so before the British vote on Brexit.  With something this important on the calendar, it’s likely that the market will just wallow around until the vote.

I did notice that the two money flow indicators on the cockpit turned positive after yesterday’s trading. So with money still coming into the market, and a VIX Buy Signal on the Board, the market could push higher.

There was also a small change in the A-D oscillator last night, so we need to be on the lookout for a Big Move within the next 1-2 days.  I was a little surprised to see this signal for a Big Move show up this early, as I expected to see it develop early next week, just before the vote on Brexit.

But until The Tide, the Dean’s List and Money Flow indicators get in sync with each other, I’m going to remain cautious and only take trades where I see good odds.  And right now, except for gold, I don’t see any.

Yesterday’s early decline in equities sent gold stocks higher. Then when equities rallied, gold fell.  GLD rallied to 125.67 before pulling back to 122.18.  BTW, my target for GLD during this run is the 133-134 level, possibly higher.  So I continue to view any pullback in GLD as a buying opportunity. 

Same for most other gold stocks.  ABX got as high as 21.40 before pulling back to 20.60.  The 2-period RSI Wilder closed with a neutral reading of 45.31.  If the  2-period RSI continues to pullback and moves under 30, I’ll be looking for a Rifle Trade in ABX and other gold stocks.  With gold stocks in a possible Wave 3 up trend, this is where I want to use my Rifle. 

My strategy for gold now is simply to hold a Basic Position and then add to it whenever the 2-period RSI Wilder on the Daily Chart becomes oversold (under 30).  This is the strategy I teach in my PT Class and in my Rifle Trading Webinar.  I simply buy and hold a Basic Position and then trade another half position, buying and selling this position every time the stock becomes oversold or overbought. 

I like to use this strategy whenever I believe that a stock is in a strong Up Trend and heading higher.

At this point, I suggest that students take a quick look at a Daily chart of ABX or your favorite gold stock.  Notice how the 50 and 200 day moving averages on ABX are forming nearly parallel lines on the chart.  Technicians call these parallel lines Railroad Tracks, and whenever you see them develop, it’s a good indication that the stock is in a strong up trend. 

Whenever I see Railroad Tracks, I start looking at the 2-period RSI Wilder.  This is The indicator I use to trade stocks in a strong uptrend.  So as long as the PT indicators on a stock like ABX remain positive, I’m gonna use the 2-period RSI Wilder to trade it.

Since ABX first entered its Uptrend in late February, when the 50 crossed above the 200, notice how many times the 2-period RSI Wilder became oversold.  There were at least nine times.  All of these were great opportunities to buy a half position and then sell it when it became overbought (2-period RSI Wilder >70).

The is a strategy that enables me to have my cake (my basic position) and eat it too.

If I’m right about gold and it continues to push higher in the weeks ahead, I plan to use my Rifle a lot.

That’s what I’m doing,

h

Market Signals for

06-17-2016

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