Professor’s Comments August 23, 2018
Posted by OMS at August 23rd, 2018
The markets were mixed yesterday as the rotation between sectors continues. The Dow dropped 89 points, closing at 25,734. The NASDAQ was up 30 points while the SPX was down 1 point. Volume on the NYSE was low, coming in at 89 percent of its 10-day moving average. There were 105 new highs and 28 new lows.
The VTI-volume indicator on the NASDAQ generated a new Buy Signal yesterday. So now, all the major indexes are on VTI-volume Buy Signals. UWM, the tracking ETF for the Russell 2K was up another 0.52 cents after generating its Buy Signal last Friday. It’s now up almost 3 points since the signal.
It appears the technology laden NASDAQ and the small cap Russell 2K are starting their final wave higher after trading sideways for the past two months. These indexes, while on VTI-volume Buy Signals, have still not entered the Trend Mode, so its likely the move is just starting.
The ‘aggressive’ sectors like technology, cap equipment, financials, and banks are still not among the top five sectors on the Strong Sector List, and until this happens, I must remain somewhat cautious about the overall market. Those ‘defensive’ issues you still see in the top 5 sectors are there for a reason. The Big Boys are still favoring the ‘defensive’ issues and until they decide to move money into technology, banks, financials, and cap equipment, it’s going to be tough to push the Dow significantly higher. That’s probably why Wave 3 up of Major Wave 5 up on the Dow will top near the 26,000 level if it hasn’t topped already done so.
If Wave 3 up on the Dow is complete and Wave 4 down is about to start, the pattern suggests it could go as low as the 25,000 level. Right now, with a positive VTI-volume indicator, the odds of this happening are still low. But IF the indicator starts to turn negative, students should understand the downside risk.
On the other hand, the patterns on the NASDAQ and RUT are still very positive, so don’t be surprised to see these indexes move higher as money from the large cap Dow stocks moves into technology and small cap issues.
Yesterday’s Sector Ratio decreased to 15-9 positive. The defensive sectors, like the FoodDrugs, Telecoms, Household Products, Transports, and Utilities continue to lead the Strong List. The Weak List continues to be led by the Semis, Material, Autos, Healthcare, and Service. Yesterday, the Materials, Energy, and Retail Sectors had large increases in Delta Trend Scores (DTS). Large increases in DTS often signal the start of a new rally phase in the sector, so it will be something to watch. I should mention that these large increases in DTS are often followed by a short-term pullback and these pullbacks often represent significant buying opportunities.
BTW, the 2-period RSI on GLD is currently overbought without a Trend in place, so the indicator also suggests a slight pullback is in order. If the pullback occurs, watch the 2-period RSI on the shorter term bars if you want to establish a ‘trial’ position.
Students should continue to watch the Materials sector, which includes gold, now that the VTI-volume indicator on the Dollar has generated a Sell Signal. The decline in the Dollar caused the VTI-volume indicator on GLD to move to a Neutral Signal. Just remember that a neutral signal is still NOT a Buy. That’s why I’m only establishing ‘trial’ positions in gold. I’ll load the truck if the VTI-volume indicator turns positive.
That’s what I’m doing,
h
Market Signals for
08-23-2018
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | POS |
Professors Major Market
Timing Signals for
08-23-2018
DOW | POS |
NASDAQ | POS |
GOLD | NEU |
U.S. DOLLAR | NEG |
BONDS | POS |
CRUDE OIL | NEU |
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