Professor’s Comments December 22, 2017
Posted by OMS at December 22nd, 2017
The markets rose mildly yesterday. The Dow finished up 52 points, closing at 24,782. The NASDAQ and SPX each rose 4 and 5 points, respectively. Volume on the NYSE was moderate, coming in at 95 percent of its 10-day average. There were 192 new highs and 42 new lows.
Yesterday’s rally did NOT clarify the wave counts. It’s still not possible to tell if sub-wave 4 of wave 5 up of final Wave 5 up is complete, or if the Dow has started sub-wave 5 up. However, the one thing that is clear is that the market is in final Wave 5 up. After yesterday’s trading, I must assume that the Dow completed its Wave 4 low on 15 November. So, with this assumption, I can now count the minor waves that developed since the 15 November low, and make a new projection. Based on the length of these waves, I must now raise my target for the Dow to above the 25,000 level, probably somewhere between 25,200 and 25,300. My new target for the SPX is a few points above the 2,700 level, possibly as high as 2,725- 2,730.
I had been using 24,700 as my previous target for the Dow, but because the recent rally was impulsive, it’s now clear that it must be sub-wave 3 within a five-wave sequence for wave 5 up. So once sub-waves 4 and 5 complete, the Dow should be trading slightly above 25,000.
Yesterday’s rally produces a few surprising changes to two of my minor indicators. The Volume Accumulation Indicator and the Money Flow Oscillator both turned NEGATIVE! These indicators have been positive since 15 September. I don’t use these indicators to trigger trades, but more as warnings. Looking back to how these indicators performed during the market turn in 2007, both indicators turned negative in early June 2007, about a month before the Dow finally topped in July. The pattern, where both indicators topped during the final sub-waves, appears to be very similar to what I’m seeing now. So, even though these indicators are negative, the 2007 scenario suggests we’ll see one more final rally to a top within a month.
Thursday’s Sector Ratio fell slightly to 19-5 positive. It was interesting to see the Ratio fall on a pretty strong day in the market. Hmmm? The Strong Sector List was led by Food Drugs, Household Products, Transportation, Media, and Energy. Yesterday I mentioned that my VTI-volume indicator generated a Buy Signal on the Oil and Gas Group, and the Integrated Oil Group, and WOW did these groups pop! CVX was up over 4 points for most of the day, but closed just under 4 points higher. The other stocks in the Group also had a nice day.
BTW, one of the things I’ve noticed recently is that when my VTI-volume indicator generates a Buy Signal on a Group, the individual stocks in the group usually have a nice day. So, the next time I see a ‘VTI-volume Group Signal’, I’ll try to mention it. I’ll also try to mention the stocks in that Group. It makes for some very nice short-term trades.
My composite VTI-volume indicator for all 24 Sectors remains on a Buy Signal, but as of yesterday, only 19 of the 24 individual Sectors are still positive. The five Weak Sectors, Utes, Insurance, Telecoms, Real Estate, and PharmaBio, are all on Sell Signals. So, overall, the market is still very strong, but not as strong as it was a few days ago. I believe those 19 Strong Sectors will still be enough to push the Dow above the 25,000 level.
Gold rose slightly yesterday, with GLD up 0.17 cents to 120.37. GLD has now risen for four straight days since my VTI-volume indicator generated a short-term Buy Signal. GLD is now approaching its 50 and 200-day moving averages. If the ETF makes a ‘Rope Jump’ it will tell me a lot about the next major move in gold.
That’s what I’m doing,
h
Market Signals for
12-22-2017
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 |
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.
Category: Professor's Comments