Professor’s Comments November 23, 2016
Posted by OMS at November 23rd, 2016
The Dow continued its rise to patterns targets, gaining another 67 points to close at 19,024. It reached an intraday high of 19,044. Volume was low, coming in at 85 percent of its 10-day average. There were 268 new highs and 19 new lows.
I’m still using 19,000 on the Dow as my trading target, even though 19,200+ is the theoretical target. My trading target for the SPX is the 2,225 – 2,240+ level. Yesterday the SPX closed at 2,203.
OK, so we’re over 19,000 now. My trading targets for the Dow and SPX have been reached. What now?
Well, like I say in Class. NO stock, no matter how good goes to heaven. Stocks go to targets. So now that my trading targets have been reached, it’s time to manage money.
Can the markets continue to rise to their theoretical targets? Sure. And right now, with the indicators being as positive as they are, it’s likely that markets will continue to chop higher. The Bullish seasonality period associated with the Thanksgiving Holiday should last until the end of the month, so stocks could easily push another 200 points higher. But will those extra 100-200 points will be worth the risk? Remember, we’re now in the zone where the markets could truncate. The Dow does not have to reach 19,200+ before it starts to decline. For all practical purposes, the Dow has now reached the top (or is very close to it) of its Major Rising Wedge Pattern.
With the markets closed on Thursday and only a shortened trading session scheduled for Friday, I don’t want to have a lot of money exposed with only a few traders minding the Wall Street store. A lot of strange things can happen during a low volume session like I expect for Friday, before the market re-opens for regular trading on Monday. So, with the markets at my trading targets, I will be taking a few bucks off the table by today’s close. I want to enjoy my Thanksgiving Holiday and not have to worry about what a handful of traders could do to the markets and my money.
But that’s just me. I’d rather know that most of the profits I have made during this rally to a final top are protected. The markets will still be there on Monday and if the indicators still look good after the weekend, I can always scalp trade.
Besides, there’s always something new to look for in the market place, and right now several areas are starting to look very interesting.
Gold and mining stocks flat lined yesterday. That’s OK as the indicators continue to firm. My custom Money Flow indicator on GLD is very close to turning positive. The VTI hasn’t turned positive yet, but it’s getting close. The same custom Money Flow indicator on UUP, the ETF for the Dollar, has turned negative, so we could see UUP start to weaken. As of last night, UUP is still on the Dean’s List, but a few of the gold and silver rabbits have hit the List. PAAS, one of my favorite silver stocks, had a nice move yesterday and is now at the top of the Dean’s List. But notice that shares of other stocks like SLW and SLV are nowhere to be found. This tells me that rest of the silver herd hasn’t started to move yet. It also tells me that PAAS will likely lead the herd higher once silver starts to move.
TBT, the inverse Bond ETF remains on the Dean’s List, so I’m still not interested in Bonds.
Same for EUO, the inverse ETF for the Euro. BTW, EUO and the UUP tend to move in sync with each other, so if you’re looking for gold to move higher, both ETFs need to drop off the Dean’s List. I expect this to happen once the equity markets start to decline.
Another EFT to watch is EPV, the Ultra Short Europe ETF. Now that the election in the U.S. has been decided, the focus will shift to Europe. The next major election to watch will be in France, where National Front’s Marine Le Pen appears to be gaining momentum for France’s highest office. Her far-right, anti-EU and anti-immigration base has rallied on her call for shuttering borders, deporting non-French citizens and exiting the EU. A Le Pen win will create significant turmoil in already shaky European markets. Right now, it’s still a bit early to be looking at EPV as the Money Flow indicators are still negative. But IF these indicators turn positive, be careful. A rise in EPV could also spell trouble for U.S. equity markets.
With U.S. markets closed Thursday for the Thanksgiving Holiday and a shortened trading session scheduled for Friday, my next report will be the WSR.
Please take time to enjoy your family during this Thanksgiving Holiday. Don’t worry about the markets…they will always be there.
That’s what I’m doing,
h
Market Signals for
11-23-2016
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS-T |
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