Weekend Strategy Review September 22, 2019
Posted by OMS at September 22nd, 2019
The markets traded mostly sideways on Friday, until China announced that it was canceling a planned visit to U.S. Farms. The news sent the markets reeling. The visit, which was seen mostly as a gesture of goodwill, was canceled after President Trump announced that he was not interested in a partial deal with China. The Dow finished with a loss of 160 points. It was down 284 points for the week. The NASDAQ fell 65 points on Friday and was down 59 points for the week.
The decline caused a few changes to the market timing indicators on the cockpit, but overall the signals remain mixed. The Timing indicator for the Dow turned Neutral while the same indicator on the NASDAQ generated a Sell Signal.
At this point its still too early to tell if the overall market is getting ready to head south. But Friday’s late decline, coming after what appeared to be the termination of Wave 2 up could be the start of something larger. What is needed now is more impulsive downside action within a five wave sequence of down moves. So far, I can only count three waves to the downside, so it’s still possible that the decline we’ve seen for the past few days could still be an a-b-c correction within final wave ‘C’ of wave 2 up. Five waves down together with a change in signals on the cockpit would confirm the start of Wave 3 down. Be patient.
After Friday’s decline, the DMIs on the Dow and NASDAQ are very close to turning negative. Both readings were less than one, so a good down day early next week could produce the change. Also, the Monet Flow indicator on the Dow turned negative on Friday, which is another sign that the institutions are starting to sell.
The market remains in a very fragile condition.
The Dean’s List and Tide have turned Neutral. The Up-Down oscillator joined the Hi-Lo indicator in negative territory, so now 2 of the 4 indicators that make up The Tide are negative.
The Sector Ratio weakened to 19-5 Positive after Friday’s session. Friday’s slight change n the Sector Ratio was the first sign in weeks that the sectors are starting to weaken. I would like to see the Ratio move to a more neutral position before increasing the Model’s short (inverse) positions. The Strong Sector List was led by Insurance, Service, Semiconductors, Food Drugs, and Healthcare. The Weak Sectors were Real Estate, Leisure, Media, Technology, and Transportation. Students should note that the trannies are back on the Weak List which is another indication the economy is weakening.
Gold (GLD) gained 1.67 on Friday closing at 142.95. I’m still avoiding gold for now as Wave 4 down continues to play out. Once this pullback completes, gold (the metal) should rally to the 1,600 to 1,650 level as Wave 5 of Major Wave 3 up unfolds. The Model continues to wait for a signal change before buying gold again.
Bonds had a nice pop on Friday with TMF gaining 1.09 to 30.01. The recent rally in Bonds appears to be related to a either a corrective wave 2 or a wave 4. In either case, once the current rally completes, Bonds should begin to move lower. The 2-period RSI on TMF closed with an overbought reading of 94.75 with a CCI showing a negative reading with no trend in place. The recent rally has produced the Blade of a negative Hockey Stick that projects decline to the 30 level. All I’m doing now is waiting for a signal change before adding a few shares of TBT, the inverse ETF for Bonds, to the Model.
There were no changes to the Model after Friday’s session. The Model continues to hold a ‘trial’ position of 600 shares of SQQQ. So far, the ‘trial’ position is up $870. The Model is currently up about 26.4 percent with $107,169 in available cash..
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.
Have a great weekend.
That’s what I’m doing,
h
Market Signals for
09-21-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 20 Sep 2019 |
NASDAQ | NEG | 20 Sep 2019 |
GOLD | NEG | 18 Sep 2019 |
U.S. DOLLAR | POS | 20 Sep 2019 |
BONDS | NEU | 18 Sep 2019 |
CRUDE OIL | NEU | 19 Sep 2019 |
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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, Weekend Strategy Review