Professor’s Comments December 20, 2017
Posted by OMS at December 20th, 2017
The markets pulled back slightly yesterday. The Dow fell 37points, closing at 24,755. The NASDAQ and SPX fell 31 and 9 points, respectively. Volume on the NYSE was moderate, coming in at 97 percent of its 10-day average. There were 160 new highs and 40 new lows.
It appears that the tax reform bill will get passed later this week. The Senate had to re-group after a several items were discovered in the bill that broke a few Senate rules. It meant that the illegal provisions had to be removed before the Senate could vote again and send the revised bill back to the House for approval. It reminded me of how Obamacare was passed…pass it first and then read it later. Once they read it, they’re gonna realize that the bulk of the tax benefits, maybe 80-90 percent, go to large corporations instead of average Americans. It this what Candidate Trump really wanted? Large corporations in America don’t pay a lot of tax, and they already have tons of cash. So, I don’t see how giving them the bulk of the tax benefits will grow the economy. Congress should have focused on the small businesses and individuals that create 70-75 percent of the new jobs. I think the tax cut will continue to help Wall Street, but not Main Street. Eventually the markets will start to realize that that current tax bill contains a lot of hype and not a lot of substance to fix America’s real problem….good paying jobs.
Yesterday’s pullback appeared to be a small correction within sub-wave 3 of wave 5 up of final Wave 5 up. If this wave count is correct, the markets should rally today, and then experience a small wave 4 pullback before completing their final wave 5 of 5 rally into Christmas.
Yesterday’s rally did not change any of the cockpit indicators. They’re still mostly positive and strong except for the Money Flow on the DIA and SPY. I did note a small decrease in the Sector Ratio, but it wasn’t much. With mostly positive indicators, I still expect the current rally to continue into late December.
Gold rose slightly yesterday, with GLD up 0.09 cents at 119.82. The VTI-volume indicator on GLD generated a short-term Buy Signal on 19 December. It’s still not clear if the current rally in gold is part of a larger move up or part of Wave ‘C’ down. We should know in another few days once GLD completes its challenge with the 50 and 200-day moving averages. I’m still only watching at this point as the 2-period RSI is overbought with the VTI-volume indicator showing No Trend. If I’m going to start buying gold, I want to buy it at a better price, with more favorable indicators. I’m not seeing anything special now.
Tuesday’s Sector Ratio moved to 20-4 positive. Students should note how the markets continue to rally with the strong Sector Ratio. The strong Ratio suggests the current rally will continue.
The Strong Sector List was led by Food Drugs, Leisure, Transportation, Household Products and Media. The VTI-volume indicator for the top 5 Sectors remains positive.
The Weak Sector List was led by the Utilities, Insurance, Service, and Energy Sectors. Right now, my composite VTI-volume indicator for the Sectors is on a Buy Signal. Also, 22 of 24 individual Sectors are on VTI-volume Buy Signals. The only Sectors on Sell Signals are the Utes and Insurance. In other words, the current market is still very strong from a sector perspective.
That’s what I’m doing,
h
Market Signals for
12-20-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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