Professor’s Comments April 25, 2019
Posted by OMS at April 25th, 2019
The markets pulled back modestly yesterday. The Dow finished down 59 points at 26,597. The NASDAQ and SPX were down 19 and 8 points, respectively. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day moving average. There were 130 new highs and 27 new lows.
There were NO CHANGES to the market timing indicators. The Dow, NASDAQ, and SPX remain on Buy Signals that continue to weaken. The Volume potion of my VTI-volume indicator on the Dow is now only fractionally above the zero line. If the Dow falls today, the signal for the Dow will likely turn neutral, possibly negative if it’s a good down day. The Russell 2K remains on a Sell Signal.
The Tide is neutral. The Dean’s List remains positive.
I continue to see large negative divergences between index prices and my breadth and money flow indicators. These negative divergences usually appear when a top of major significance is approaching.
It’s still not clear whether the short-term top that appears to be developing will be wave 1 up of a five wave Ending Diagonal Pattern or the conclusion of the larger pattern. In either case, IF the decline causes my market timing signals to turn negative, I’ll begin to add inverse index ETFs to the Model Portfolio.
The Sector Ratio weakened considerably after yesterday’s session. The Ratio dropped to 17-7 positive as four sectors with low RS ratings moved to the Weak List. The seven weak sectors were Healthcare, PharmaBio, Service, Telecoms, Consumer Products, Food Drugs, and Material (which includes gold). If the market begins to decline as the pattern suggests, expect the sectors on the Weak List to lead the way lower. The Strong List was led by Real Estate, Semiconductors, Technology, Media and Leisure. There are still 5 sectors on the Strong List with RS ratings of 1 or zero. So even though the Strong List still appears strong, its internals (RS ratings) are weakening.
Model Portfolio: There were NO Changes to the Model after yesterday’s session. The Model continues to hold a ‘trial’ position (1,000 shares) of TZA, a 3X inverse leveraged ETF for the Russell 2K. The remainder of the theoretical $100,000 Model Portfolio remains in cash ($95,980).
At this point, with weakening breadth and Money Flow indicators and a falling Sector Ratio, one or two good down days could turn the market timing indicators negative, so I’m not anxious to put new money to work.
GLD rose 0.35 cents to 120.45. The current pattern for GLD suggests the ETF is in the process of completing wave ‘c’ down of Wave 2 down. Once Wave 2 down completes, gold (and silver) should begin to rally hard as Wave 3 up unfolds. Gold remains on a Sell Signal. Be patient.
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
04-25-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 01 Apr 2019 |
NASDAQ | POS | 13 Mar 2019 |
GOLD | NEG | 11 Apr 2019 |
U.S. DOLLAR | POS | 23 Apr 2019 |
BONDS | NEG | 22 Apr 2019 |
CRUDE OIL | POS | 18 Apr 2019 |
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