Professor’s Comments May 26, 2017
Posted by OMS at May 26th, 2017
The Dow rose over 100 points early, then pulled back to finish up 71 points at 21,082. At its high, the Dow was only 57 points from the 1 March high of 21,169. Volume was moderate, coming in at 100 percent of its 10-day average. There were 273 new highs and 42 new lows.
The patterns for the Dow and SPX appear to be diverging. The Dow remains in a sideways triangle, range bound between 21,150 on the upside and 20,500 on the down. But after yesterday’s trading, the SPX appears to be forming an irregular flat pattern. An irregular flat is similar to a sideways triangle, but one of its sub-waves wave exceeds the upper trend line of a sideways triangle. If this is the case, the SPX should begin its next wave down very soon. This decline would be sub-wave ‘c’ down of Wave ‘D’ down and could end in mid-June. This wave could drop the SPX to the 2,320 level before it completes. The decline would be about 100 S&P points from current levels.
I will be updating the charts for the Dow and SPX to show the developing patterns this weekend.
There was a small change in the A-D oscillator yesterday of 8.2 points. The small change signal means we need to be on the lookout for a Big Move within the next 1-2 days. If the Dow and SPX are going to start the next down legs of their triangle or flat patterns, the small change signal could help them along.
Yesterday’s early rise in the Russell 2K eliminated the waves 1 and 2 set-up of the declining pattern I was watching on the 5-min bars for that index. However, by the end of the day, another small reversal pattern had formed which continues to suggest a break of 1,380 should be watched closely. On a slightly larger scale, yesterday’s small rise extended the ‘Blade’ of the negative Hockey Stick Pattern that has been forming for the past 6 trading days. The ‘Blade’, which is likely wave 4 of the larger pattern, now looks complete. I still plan to short the RUT on a move below 1,380 by buying a few shares of TWM, the inverse ETF for the Russell 2K.
Gold continues to trade sideways along its moving averages. GLD fell 0.13 cents to 119.48. The sideways trading is developing a nice ‘Blade’ that should enable GLD and other mining stocks and ETFs to move higher once it completes. The breakout from the ‘Blade’ could happen if the equity indexes start to decline. Continue to watch gold as the VTI on GLD continues to move up and now has a positive bias reading of 56.7. GLD will likely start to trend when the VTI moves above 70.
That’s what I’m doing,
h
Market Signals for
05-26-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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Category: Professor's Comments