Professor’s Comments December 12, 2018
Posted by OMS at December 12th, 2018
The markets finished mixed yesterday. After opening 368 points higher, the Dow pulled back, turned negative, and closed 53 points lower at 24,370. The NASDAQ finished up 11 points while the SPX was down one point. Volume on the NYSE was moderate, coming in at 95 percent of its 10-day moving average. There were 12 new highs and 561 new lows.
Yesterday’s up-down-up action was corrective and appeared to be part of final sub-wave ‘c’ of Wave 2 up. If I’m correct about this, the Dow should continue to rally into the end of the week approaching the 25,000 level, possibly as high as 25,000+.
There were no changes to the indicators after yesterday’s session. The Money Flow indicators I talked about in previous Comments remain positive. This and the zig-zag pattern we’ve seen develop this past week tell me we’re completing Wave 2 up within Major Wave 3 down. Wave 3 of Major Wave 3 down will be next. Be careful.
I will be looking to establish short positions using inverse index ETFs near or above the 25,000 level on the Dow. I’m currently using the 2710+ level as my upside target for the SPX.
Yesterday’s Sector Ratio finished with a reading of 1-23 negative. Once again, the only positive sector was Real Estate and with a RS rating of zero, it wasn’t that positive. BTW, people appear to be buying REITS now because of their dividends. We saw this happen just before the market crashes of 2001 and 2007-2008. It proved to be a mistake, as the sector fell along with the market both times. To give you an idea of how wrong the dividend seekers were with the REITS in 2007-2008, the S&P Real Estate Sector fell from a high of 13,302 in February 2007 to a low of 2,882 in March 09. Buying dividend paying stocks in a Bear Market once again proved to be a fools game.
On the other hand, gold, while paying no dividends, maintained its value during the crash. On January 5, 2007, GLD, the gold ETF, was trading at 60.17. When the crash was over in March 2008, GLD was trading just under 100. It proved to be one of the few ‘safe’ places to be. It’s why I’m watching and trading gold now.
Gold remains on a Buy Signal. GLD continues to trade along its 200-day moving average. And each day it trades near or above the 200, it’s moving the 50 up toward the 200. At some point, the 50 will cross above the 200 putting GLD in an Up Trend. This Up Trend should be Major Wave 3 up. The recent ‘Rope Jump’ in GLD identified the move as part of wave 1 of Major Wave 3 up. Now by trading along the 200, GLD is developing a wave 2. Once this wave completes, gold, GLD, and the miners should begin to move significantly higher. I continue to look for scalp trades in the metals. I’m also establishing a few longer-term positions in mining ETFs that I plan to hold for the next few years. I bought a small position in GDX yesterday and plan to add additional shares on any dip.
That’s what I’m doing,
h
Market Signals for
12-12-2018
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | SM CHG |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 06 Dec 2018 |
NASDAQ | NEG | 07 Dec 2018 |
GOLD | POS | 03 Dec 2018 |
U.S. DOLLAR | NEU | 28 Nov 2018 |
BONDS | POS | 19 Nov 2018 |
CRUDE OIL | NEG | 23 Oct 2018 |
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