Professor’s Comments July 25, 2019
Posted by OMS at July 25th, 2019
The markets were mixed yesterday with strong internals. The Dow finished with a loss of 79 points, at 27,270. The NASDAQ and SPX were up 70 and 14 points, respectively. Volume on the NYSE was moderate, coming in at 106 percent of its 10-day moving average. There were 238 new highs and 32 new lows.
Yesterday’s rally in the NASDAQ caused the market timing signals on that index to move to a Buy Signal. So now the SPX, NASDAQ, and Russell 2K are on Buy Signals while the Dow remains on a Neutral Signal.
The Tide and Dean’s List turned positive after yesterday’s session. Despite the decline in the Dow, the breadth during yesterday’s session was strong enough to turn the Tide and Money Flow indicators back to positive. A flip-flop like this is NOT unusual to see while the market develops its top as most Bull Markets are very reluctant to throw in the towel. The Money Flow indicators on both the Dow and NASDAQ also turned positive.
After looking at the charts and the strength of yesterday’s session, it’s possible the Dow could re-test its 16 July high of 27,399 during the next few days. The trading action since 15 July has been flat to sideways, which is usually a consolidation for a move higher. Because of this sideways action, I would be very surprised if the Dow didn’t retest the 27,400 level.
Today is the center date of the Fibonacci cluster window I mentioned yesterday. Market turns usually happen within a few days to a week of this event. Because of this, students should pay close attention to the market timing indicators during the next week.
The Fed will meet next week to announce its latest policy on interest rates. It’s widely expected that it will reduce short-term rates by 50 basis points. If this happens, it will be an open admission that the economy is weakening, something very different than what the Fed was projecting at the end of last year.
The Sector Ratio remained at 17-7 Positive after yesterday’s session. The Strong List was led by Semiconductors, Material (includes gold), Household Products, Insurance, and Healthcare. The Weak Sector List was led by Service, Retail, Energy, Utilities, and FoodDrugs. Students should also pay close attention to the Sector Ratio now, as any weakening would be further evidence that a top is in.
Model Portfolio: There were NO CHANGES to the Model after yesterday’s session. The Model still holds 500 shares of TBT, the inverse ETF for Bonds, and 800 shares of UGL, a 2X leveraged ETF for gold.
After yesterday’s session, the Model is up 20.6 percent which translates to an annualized gain of 57.8 percent. The Model continues to hold a lot of cash, waiting for high probability opportunities to put the cash to work.
With gold and mining stocks leading the Dean’s List, gold still appears to be the best bet on the board. I continue to believe that once the metal completes its current wave 2 pullback, the next wave up will see gold move to significantly higher prices. BTW, after looking at a chart of GLD, it appears that the ETF spent the last month developing a sideways triangle. Triangles are usually found in wave 4s. So, IF this is the case, it means the recent breakout and pullback are waves 1 and 2 of a wave 5 sequence in gold. This means that the next impulse wave (wave 3 up of 5 up) should be right around the corner. I continue to view any pullback in gold as a buying opportunity.
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
That’s what I’m doing,
h
Market Signals for
07-25-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 10 Jul 2019 |
NASDAQ | POS | 24 Jul 2019 |
GOLD | NEU | 22 Jul 2019 |
U.S. DOLLAR | POS | 22 Jul 2019 |
BONDS | NEG | 17 Jul 2019 |
CRUDE OIL | NEG | 24 Jul 2019 |
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
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.
Category: Professor's Comments