Professor’s Comments March 21, 2017
Posted by OMS at March 21st, 2017
The Dow fell 9 points, closing at 20,906. Volume was light, coming in at 86 percent of its 10-day average. There were 110 new highs and 22 new lows.
Yesterday’s small light volume decline appeared to be part of a small wave 4 that should be nearing completion. Wave 4’s are always a challenge to trade, because they consist of so many down-up-down-up moves. But the fact that these moves are occurring now, tends to identify the pattern as a small wave 4. If this is the case, the market should be starting its final wave 5 rally up very soon.
I still expect wave 5 up to complete near the 21,300 level.
The VTI on the Dow turned down slightly last night, but at 84.4, remains solidly in the Uptrend Mode. This tends to support additional upside.
The Tide is negative, but the Dean’s List remains neutral with 3 of the 4 major index ETFs still on the List. A negative Tide with a neutral Dean’s List is usually a sign the overall market is undergoing a wave 4 correction.
BTW, TLT and TMF, the two positive 20+ year Bond ETFs are back on the Dean’s List. TLT rose 0.51 cents yesterday to 119.15. By seeing the Bond ETFs back on the Dean’s List less than a week after the Fed raised short-term interest rates a quarter point, it’s telling us that long-term interest rates are currently falling, not rising. This means that the yield curve is flattening! A flattening yield curve is not something you want to see if you’re Bullish on equities. It’s usually an early warning sign of trouble ahead.
The Bollinger Bands continue to narrow. Currently the Upper Band is located at 21,063, with the Lower Band at 20,715. If the Dow starts to move above 20,063, it will start to push the Upper Band higher. This would tend to confirm that final wave 5 up is underway. On the other hand, if the Dow continues to decline and starts to move below 20,715, it would likely mean that final wave 5 up has truncated and a top is in.
Yesterday’s Sector Report was little changed. The report had 19 strong sectors and 4 weak. The Semiconductors, Banks, Financials, and Transports continue to lead, with Energy, Service, and Retail lagging.
Gold and mining stocks finished higher yesterday. GLD rose 0.57 cents to 117.56, which pushed it slightly above its 200-day moving average. This rise was another ‘Rope Jump’, which usually requires some consolation before the equity can move higher. During the consolidation, the 50 will need to move above the 200, so GLD can start its Uptrend. This might be a difficult task for gold during the next week or so if equities start pushing to new highs. If the late February high of 120.4 was Wave 1 Up, yesterday’s small Rope Jump’ could have been corrective wave ‘b’ of Wave 2. This would mean that GLD could trade down to the 114 level before wave ‘c’ of Wave 2 is complete. Again, we need to be patient with gold.
That’s what I’m doing,
h
Market Signals for
03-21-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | NEG |
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