Professor’s Comments May 31, 2017

Posted by OMS  at May 31st, 2017

The Dow fell 51 points yesterday, closing at 21,029.   Volume was moderate, coming in at 90 percent of its 10-day average.  There were 132 new highs and 63 new lows.

It appears that the Dow and SPX are starting a Wave ‘D’ decline within the triangle patterns they have been in since the beginning of March.  Wave ‘D’ down could drop the Dow to the 20,500 level IF the decline is a standard ‘D’ wave.  If Wave ‘D’ down turns out to be a flat or zig-zag pattern, the decline could get as low as 20,100. 

After all five waves of the triangle pattern are complete, probably in mid to late June, the markets should start a nice rally into the September-October period, exceeding the 22,000 level.

All four of the breadth indicators that make up The Tide turned negative yesterday.  So now The Tide is negative.  The A-D oscillator turned negative after five days of positive readings.  This means that most of the stocks on the NYSE are now moving down.  BTW, except for the last five days, the A-D oscillator has been negative for most of the month of May.  Looking back, the Dow started the month of May at 20,913.  It will likely end the month near 21,000.  It’s extremely hard for the market to rally when the A-D oscillator is negative.

Yesterday’s Sector Report showed 11 strong and 13 weak sectors.  The Semis, Computers, Leisure, Food, and Utility Sectors continue to show strength with Autos, Specialty Banks, Real Estate, Energy, Retail, and Telecoms lagging.   If the weak Sectors remain in the majority, it’s likely the triangle patterns on the Dow and SPX will continue to develop.

Gold pulled back yesterday from slightly over bought conditions.  The 2-period RSI on GLD was at 87.7 going into yesterday’s session with NO Trend in place.  The indicator finished the day with a neutral reading of 52.1.  So, with No Trend in place, GLD pulled back 0.40 cents to 120.14.  This is what happens with stocks are overbought without a trend.  Meanwhile the VTI on GLD continues to head up and is now at 62.7.  Once the VTI moves above 70, GLD should start to trend.  But right now, it’s still consolidating for the next move up.  Be patient.

One thing to note about GLD is that its 50 is above the 200, so GLD is technically in an Uptrend as defined by the moving averages.  As long as this continues, we need to watch the 2-period RSI for Rifle Trading opportunities whenever the 2-period RSI becomes oversold. 

I will be leaving for an Alaska Cruise later today.  Once I board the ship, I will start my normal vacation reporting schedule, providing Comments on Tuesday, Thursday, and the WSR on Saturday morning.  I’ll try to update the Lists every night, but there are no guarantees.  Internet access aboard ship has improved significantly in recent years, but this is my first trip to Alaska, so I don’t know what to expect in that environment.  We’ll be stopping at four ports, so at worst, I should be able to get internet access to download data while in port.  

BTW, if I see something start to develop that is different from the Wave ‘D’ decline that I’m expecting, I’ll let you know.  Otherwise, the chart patterns for the Dow, SPX and RUT that I showed in the WSR should continue to develop. With the markets in a developing triangle, keep your positions small and remember to take profits quickly.

Going cruising…

That’s what I’m doing,

h

Market Signals for

05-31-2017

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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