Professor’s Comments August 21, 2018

Posted by OMS  at August 21st, 2018

The markets finished higher yesterday. The Dow rose 89 points after generating new Buy Signal from the VTI-volume indicator. The NASDAQ and SPX were up 5 and 7 points, respectively.  Volume on the NYSE was light, coming in at 87 percent of its 10-day moving average.  There were 147 new highs and only 27 new lows.  

There were no changes to my key indicators after yesterday’s session.  The VTI-volume indicator on the DOW remains positive.  The same indicator on the NASDAQ remains neutral but is very close to generating a new Buy.  A positive day today would likely do the trick.

The overall patterns are very Bullish at this point, however the divergences I’m seeing in breadth are still something that we need to pay attention to.  My short-term target for the Dow remains near 26,000 for Wave 3 within Major Wave 5 up. My final target is closer to the 26,660 level, possibly higher.  If the VTI volume indicator starts to turn neutral or  negative as the Dow approaches 26,000, the short term patterns suggest that Wave 4 of Major Wave 5 up could correct back to the 25,000 level before final Wave 5 up begins.

Even though the Dow is on a tear right now, I’m starting to see more and more rotation going on between the sectors.  So, IF the Dow starts to pull back next week, don’t be surprised to see money start to flow into NASDAQ technology and small cap stocks on the Russell 2K.  The VTI-volume indicator on UWM, the tracking ETF for the Russell 2K generated a Buy Signal last Friday and the sideways triangle pattern for the ‘Blade’ suggests higher prices.  I like UWM at current levels, as long as the indicators remain positive.

The big story yesterday was about gold.  The VTI-volume indicator on the 60 minute chart of GLD finally turned positive.  As most of you know, I love to trade gold.  However, because  the Daily VTI-volume indicator on the metal has been negative since late April, so I’ve stayed away.  I’ve been watching the slide down, waiting for the metal to bottom.  Yesterday, I saw the first sign that a turnaround could be near.  Seeing the 60s turn positive, I took my first plunge and bought a trial position in GDX and NUGT, a highly leveraged gold ETF.  If gold continues to rise, and the VTI-volume indicator on the Daily chart turns positive, I’ll add to my ‘trial’ position.

Yesterday’s Sector Ratio increased to 16-8 positive.  The defensive sectors continue to lead the Strong List.  However, Cap Goods, Banks, Technology, and Financials are now back on the List.   The Weak List continues to be led by the Semis, Material, Leisure, Energy, and Healthcare.  Students should note that the Materials sector, which includes gold, remains on the Weak List.  This needs to change if gold is going to enter a sustained rally phase.

Students should also note that during the Dow’s recent sideways correction, the Sector Ratio never turned negative.  So now that the Ratio has started to increase again, it too suggests higher prices.  Students should take note of this and pay attention to the indicator the next time it starts to turn negative.  Remember, the markets are forming Ending Diagonal Patterns that suggest higher prices for the short-term. But as we know, Ending Diagonals can and often do truncate and do not reach their projected targets.  So, watch the Sector Ratio for signs of trouble. If it starts to turn negative, you might want to take appropriate action to manage your money.

That’s what I’m doing,

h

Market Signals for

08-21-2018

Professors Major Market

Timing Signals for

08-21-2018

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.