Professor’s Comments March 16, 2018
Posted by OMS at March 16th, 2018
The markets were mixed yesterday. The Dow finished up 116 points, closing at 25,874. The NASDAQ was down 15 points, the SPX rose 2 points. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day average. There were 32 new highs and 136 new lows.
Not much changed after yesterday’s trading. It still appears that the final waves of the large triangle for wave 4 are nearing completion. If this is the case, (and it’s still a BIG IF), the next rally wave should be starting soon. If it doesn’t and the triangle is an aberration, the Dow should start to move lower, breaking below 24,000 as the next leg (Wave 3 down) of the new Bear Market begins. The Bollinger Bands on the Dow continue to narrow, which suggests a Big Move is nearing. So, either way, we need to be ‘on our toes’.
I’m still favoring the Bullish Scenario. The Dean’s List is still positive with a neutral Tide. Last night, the Hi-Lo and Up-Down oscillator were negative, which means that 2 of the 4 indicators that make up The Tide are negative. So, if the market starts to move up next week, it’s a lot easier to turn these two indicators positive than it is to turn the Dean’s List negative.
Also, while my combination VTI-volume indicator on the Dow is still negative, yesterday’s rally on the Dow caused the volume portion to approach the zero line. If this indicator or the Tide turns positive, I’ll start becoming aggressive on the upside. The size of the triangle suggests a large move is coming, probably somewhere between 4-6 percent. A four percent move to the upside would see the Dow test its old high. If this happens, the Dow would likely enter the Trend Mode, which would open the door for a move toward 28,000+. We’ll see.
Right now, NO Trend conditions still apply to the Dow and SPX. Scalps only for these guys. Not so for NASDAQ technology. The NASDAQ continues to trend.
BTW, even though the Dow rallied yesterday, the NASDAQ pulled back. The 2-period RSI on the NASDAQ closed with a reading of 25, so Rifle Trading conditions are in place for technology stocks. Remember, the NASDAQ is on a Buy Signal with an Up Trend in place. So late in yesterday’s session, I had my rifle loaded. Remember, if your using live data, you can see these oversold conditions set up during the day. You don’t have to wait for the next day to pull the trigger. Just use the very short-term bars to enter the trade.
Also remember that I went into yesterday looking for opportunities to place bets on horses like Micron, Intel, and other technology issues for the big race. So, when the 5 min bars on Micron turned positive, I went to the betting window and bought a few tickets. On stocks like these, I’m willing to hold them overnight. Why? They’re in an UP TREND. Micron and Intel are NOT in a triangle.
Besides, Semiconductors, Computers, Technology, Healthcare and Banks continue to dominate the Strong Sector List. So, I don’t care about the overall market. I DON’T! As far as I’m concerned, the rest of the market is junk! It’s holding back technology.
If you get a chance today, you might want to look at the nice ‘Blade’ that has developed on a few technology stocks like Micron and Intel on the hourly bars. Notice how both stocks have pulled back during the past three days. Then…are you ready for this? Look at the size of the ‘Stick’. Now do you understand why I’m excited about technology?
I believe the Big Race will start early next week. That’s when I believe we’ll see a breakout from the triangle. After watching my horses rest in the barn yesterday, they’re doing exactly what I would do if I wanted to win. Resting and eating. So yesterday, while a few non-competitive Dow horses were out on the track testing their legs, the technology horses were sleeping. They know what’s coming. Don’t worry about the Dow horses. Only a few will be competitive in the coming race. Take your Racing Program and cross off any entries from the Weak Sector List. Then you might want to add the ‘Blade’ on technology to your tip sheet, along with the Strong Sector List.
That’s what I’m doing,
h
BTW, energy was one of the sectors out on the track yesterday. My VTI-volume indicator mover up to the point that it could turn positive in the next day or so. Hmmm? If it does, I’ll take a closer look at CVX. After all, it is March.
Market Signals for
03-16-2018
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
VTI | NEG |
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