Professor’s Comments September 1, 2017
Posted by OMS at September 1st, 2017
The markets finished higher again yesterday. The Dow was up 56 points, closing at 21,9862. The technology laden NASDAQ and the SPX finished up 60 and 14 points, respectively. Volume on the NYSE was heavy, coming in at 111 percent of its 10-day average. There were 133 new highs and 19 new lows.
My VTI-volume indicator remains on a Buy Signal. The Dean’s List and The Tide have turned positive. So, for the very short-term, the indicators are positive. I don’t believe they will stay that way, because both scenarios I have on the Board call for declines once the current rally completes.
Yesterday’s early 74- point rally was likely the Big Move predicted by Tuesday’s small change in the A-D oscillator. The Dow got as high as 21,986 during the rally, which was slightly above the 21,950 level I talked about yesterday as the upper target for the Bearish Scenario, but just shy of the 22,000+ level of the Bullish Scenario. So, the technical picture is still clouded.
The BLS will be releasing the August Jobs report at 8:30 this morning. The report can move markets, so the uncertainty created by yesterday’s in between finish should be resolved early this morning.
If the Dow rallies above 22,000, it’s likely the Bullish Scenario is occurring. In this scenario, the Dow should rise slightly above 22,000 to complete wave ‘b’, then trade down to the 21,700 level for wave ‘c down. The decline to about 21,700 should be followed by small waves ‘d’ up and ‘e’ down to complete the triangle. Once all five waves of the triangle are complete, the Dow should rally to about 22,400+ to complete the pattern The Bullish triangle would be wave ‘D’ of the Ending Diagonal Pattern, which means that the final Wave ‘E’ top would likely occur sometime in late-September-early October.
On the other hand, IF the Dow starts to decline after the Jobs Report, it’s likely the Bearish Scenario is occurring. This scenario assumes that the Dow topped on 8 August, completed wave 1 down on 21 August and is in the process of completing retracement wave 2 up, with wave 3 down next. Despite yesterday’s early rally, the intraday trading had several a-b-c corrective moves, which are characteristic of a wave 2. If this is the case, wave 2 could be complete and wave 3 down should start immediately after the announcement. We’ll see.
Yesterday’s Sector Report remained weak. However, the number of strong sectors increased to 10. The Strong Sector List is led by Materials, Utilities, Semis, PharmaBio, and Computers. The number of Weak Sectors fell to 14 led by Household Goods, Telecoms, Consumer Goods, Autos, and Service. The Sector List ratio is now 10-14 negative. The Relative Strength Ratings of the top sectors, both weak and strong, are all 2s. So the strongest sectors are as strong as the weak sectors are weak. This is why the market is basically treading water. There is no dominant force behind the market at this time. There’s just a lot of sector rotation going on, where money is moving out of the traditional growth sectors, like Consumer Goods and Autos, and into the more defensive sectors, like Utilities and Materials. Think of it this way: In good times, people buy cars, TVs, golf clubs and furniture. When they start to worry about their job or the economy, they stop buying these consumer goods, and stick to things they need, like their electric service (Utilities) and medications (PharmaBio) . That’s what the Lists are telling you now.
Gold rallied strongly yesterday. GLD rose 1.46 points to 125.82. Yesterday I mentioned that GLD would likely see the 127+ level on this run before wave ‘B’ up of Wave 2 down completes. Gold remains a short-term trade because once wave ‘B’ up completes, it will likely fall to the 105 level during wave ‘C’ down.
Waiting for the Jobs Report.
That’s what I’m doing,
h
Market Signals for
09-01-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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