Professor’s Comments February 12, 2019
Posted by OMS at February 12th, 2019
The markets were mixed yesterday. The Dow rose 53 points, closing at 25,053. The NASDAQ and SPX were up 10 and 2 points, respectively. Volume on the NYSE was low, coming in at 88 percent of its 10-day moving average. There were 86 new highs and 11 new lows.
The markets appear to be working on the right shoulder of a Head & Shoulders topping pattern. Assuming Friday’s early low was the completion of wave 1 of Wave 3 down, yesterday’s choppy trading was likely part of retracement wave 2 up within Wave 3 down. If this is the case, wave 2 up might need a bit more upside before it completes.
If I’m right about the H&S Pattern, retracement wave 2 up, which will form the right shoulder of the pattern, should develop as an a-b-c move. So far, I can only count waves ‘a’ up and ‘b’ down of wave 2 up. The pattern still appears to need a final wave ‘c’ up’ to complete the retracement move. This will likely occur today.
BTW, students might want to watch this ‘c’ wave up develop, as once it completes it might provide an excellent trading opportunity to establish a few small trial positions (shorts) on the short-term bars.
Yesterday’s trading was not enough to change my market timing signals on the cockpit for equities. The Dow, NASDAQ, SPX, and RUT remain on Buy Signals. The volume portion of my VTI-volume indicator on the Dow remains on a sell signal making the overall signal Neutral. As long as the market timing signals on the cockpit remain positive to neutral, the market will likely chop around forming the right shoulder of the H&S topping pattern.
The Tide and Dean’s List also remain positive.
The Sector Ratio rose slightly after yesterday’s session. The Ratio is now 14-10 positive. Students should continue to watch for changes to the Strong and Weak Lists. Once wave 2 up completes, the Sector Ratio and the Lists should begin to reflect the new change in direction.
After yesterday’s session, the Strong List continued to be led by Household Products, Semiconductors, Technology, Real Estate, and Semiconductors. The Weakest Sectors were Energy, Autos, Food Drug, Healthcare and Telecoms.
Gold (GLD fell mildly yesterday, dropping 0.61 cents to 123.60. GLD still appears to be in a small wave 2 pullback. It remains on a Buy Signal.
Same short-term pattern for Crude Oil (UCO). It also appears to be forming a small wave 2 as it trades along its 50-day moving average. Crude Oil remains on a Neutral Signal. Signal. The Bollinger Bands are EXTREMELY narrow as the Money Flow indicators continue to rise. This suggests the next move in crude will be to the upside. I continue to watch for the timing signal on Crude to turn positive. If it does, I’m a buyer.
That’s what I’m doing,
Market Signals for
|DOW||NEU||08 Feb 2019|
|NASDAQ||POS||07 Jan 2019|
|GOLD||POS||25 Jan 2019|
|U.S. DOLLAR||POS||07 Feb 2019|
|BONDS||POS||07 Feb 2019|
|CRUDE OIL||NEU||04 Feb 2019|
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