Professor’s Comments Update 2/11/20
Posted by OMS at February 11th, 2020
Not much changed after yesterday’s session even though the markets closed with a strong rally. The Dow finished with a gain of 74 points at 29,277. The NASDAQ was up 107. Volume on the NYSE was moderate coming in at 97 percent of its 10-day average. And even though the markets finished with a strong rally, the breadth was weak. Instead of turning the breadth indicators positive, they became more negative. The Tide now has 3 of its 4 breadth indicators negative. The Hi-Lo indicator is the only positive breadth indicator. Also, the most important breadth indicator, the A-D oscillator remains negative. It’s only had one positive day since 22 January. So even though the Tide is neutral, I must take this neutral signal as a warning.
I’m at sea on Celebrity’s Reflection this morning and the internet is very slow, so I’m going to keep this brief. Here’s the important thing you need to know about yesterday’s trading action:
In my WSR, I showed two potential scenarios for the Dow: one up and one down. Yesterday’s early decline saw the Dow drop to a low of 28,996. At that level, it could have been the completion of wave 1 down of the Bearish scenario (the start of Wave 3 down). We still don’t know. So, it will be important to watch what happens during the next day or so. The reason I say this is because yesterday’s late rally could have been retracement wave 2 up. If this is the case, the Dow will likely chop back to the 29,320 level, possibly even has high as 29,391 before beginning to fall again. The choppy trading action is what I’ll be looking for. If the Dow stays below 29,391, I must give the odds to the Bearish scenario based on breadth and pattern. A move above 29,391 would negate this Bearish scenario and mean the Dow will likely chop higher into March.
The Sector Ratio was a neutral 12-12 after yesterday’s session, so the Sectors are not providing any guidance now. With a neutral Sector Ratio and mixed signals, I’m OK with being on the sidelines.
The Model is 100 percent in cash.
I’m still watching Crude Oil too for a possible bottom. Yesterday, UCO dropped another 0.44 cents to 13.44. The timing signal for crude oil has been spot on since UCO started its decline a month ago, so I’m watching it closely waiting for the signal to change. Given the potential for a large move up within its triangle pattern, I’m just being patient and waiting for the signal. It’s starting to look like crude could become the best bet on the board.
That’s what I’m doing,
h
Market Signals for
02-11-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 05 Feb 2020 |
NASDAQ | POS | 04 Feb 2020 |
GOLD | POS | 17 Jan 2020 |
U.S. DOLLAR | POS | 31 Jan 2020 |
BONDS | POS | 07 Feb 2020 |
CRUDE OIL | NEG | 10 Jan 2020 |
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