Professor’s Comments December 10, 2019

Posted by OMS  at December 10th, 2019

The markets pulled back yesterday after rallying hard on Friday.  As I mentioned last week, without the Bullish Thanksgiving /end-of-month bias, it was going to be hard for the markets to sustain a move much beyond 28,000. The Dow finished with a loss of 105 points, closing at 27,910.  The NASDAQ and SPX were down 35 and 10 points, respectively. Volume on the NYSE was moderate, coming in at 99 percent of its 10-day moving average.  There were 106 new highs and 18 new lows.

Yesterday’s decline could be the start of wave 3 down of Wave 1 down.  If this is the case, it means the Dow topped on 27 November at the 28,175 level.  At this point, I still can’t be sure if the top is in as it’s still possible that the Dow could make one more push higher to complete Major Wave ‘D’ up. If the Dow rises above the 28,037 level in the next day or so, it could push to slightly above 28,175.  However, the more likely scenario is that the Dow will continue yesterday’s decline in a move toward the 26,650 level.  As long as the market timing signals remain positive, I still MUST protect against the former scenario.

The markets remain at a critical point in their patterns, showing negative divergences and sentiment readings that suggest they could begin to change direction in the days ahead.

There was a small change in the A-D oscillator last night, so we need to be on the lookout for a Big Move in the Dow during the next 1-2 days.  If the Dow moves below the 27,325 level, it would blow-up the one remaining Bullish possibility and confirm the top is in.

There were no changes to the market timing indicators after Monday’s session.  The Dow, SPX, NASDAQ, and Russell 2K remain on Buy Signals.  But like I mentioned last weekend, because I can now count five complete waves in the Ending Diagonal pattern, I wouldn’t put too much faith in the signals. They are at showing EXTREME negative divergence and could turn in a heartbeat.

The Dean’s List and Tide remain Positive.

The Sector Ratio stayed at 18-6 Positive after Monday’s session.  The Strongest Sectors were Healthcare, Retail, Service, PharmaBio, Food Drugs, and Banks. The Weak List was led by Media, Telecoms, Utilities, Energy, and Transportation.

Gold (GLD) remains on a Neutral Signal.  During the past few days, GLD has traded in a very narrow range that has caused its Bollinger Bands to narrow.  Narrow Bands usually mean that a Big Move is coming. All I’m doing now is waiting for the timing signal in gold to change.  If the signal turns positive, gold could be starting its Wave 5 up. I’m being patient with my gold purchases now, mostly because the signal could turn also turn negative, which would likely lead to significantly lower prices in gold.

Bonds (TMF) rose 0.19 cents yesterday to 28.8. Bonds remain on a Neutral Signal with a conflicting pattern, so I’m just waiting for a signal change.  It’s possible that Bonds are finishing w wave 2 up, and IF this is the case, they should begin to resume their Wave 3 down pushing interest rates higher.  With an unclear pattern, I’m still on the sidelines with Bonds.

UCO (crude oil ETF) was flat yesterday.  The ETF remains on a Buy Signal as it continues to battle resistance of the 200-day moving average near the 19 level.  Once this resistance is broken, UCO should begin to chop higher as wave ‘c’ up unfolds.

There were NO CHANGES to the Model yesterday.  The Model continues to hold 1,500 shares of UCO.  It also holds ‘trial’ positions of 1400 shares of DXD, 300 shares of SQQQ, and 500 shares of GDX and cash.  I will be updating the Model later today and post the percentage gain tomorrow along with a few brief comments on today’s action.  Also, if the timing signals turn negative today, responding to the small change signal in the A-D oscillator, I will likely be adding to the Model’s ‘trial’ positions. I’ll post any new changes to the Model within a few minutes after the purchase or sale.

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

12-10-2019

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.