Professor’s Comments February 28, 2018
Posted by OMS at February 28th, 2018
The markets fell hard yesterday giving back most of Monday’s gains. The Dow finished down 299 points, closing at 25,410. The Dow is still up 448 points since my VTI-volume indicator generated a Buy Signal. The NASDAQ and SPX finished down 91 and 35 points, respectively. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day average. There were 96 new highs and 55 new lows.
Not much changed with the indicators yesterday. They’re still mixed. My VTI-volume indicator on the Dow remains on a Buy Signal. With all the up-down-up-down trading we’ve seen the past week, it’s possible that yesterday’s decline was part of a developing sideways triangle for wave 4 in the Bullish Scenario. If this is the case, the Dow should trade between 24,000 and 25,750 for the next week or so before moving higher. It’s also possible under the Bearish Scenario that the Dow topped on 26 January and that the rally that started on 9 February is part of retracement Wave 2 up. A break below the 9 February low would confirm the Bearish Scenario.
Meanwhile, the Dow is in no man’s land, so students should expect more volatile choppy trading if a triangle is forming. If the Dow breaks above 26,000 after developing the triangle, it would be very positive for the markets. Remember, triangles are consolidation patterns, and the price usually moves out of a triangle in the direction it entered the triangle. In the current case, the direction should be up. But all five waves of the triangle need to complete. Right now, IF the rally since 9 February is part of the developing triangle, it would be wave ‘b’ up in the Bullish Scenario. Waves ‘c’ down, ‘d’ up and ‘e’ down would still need to complete. And during this time, the Dow should trade between 24,000 and 25,750. A break below 23,300 would be extremely negative.
As long as my combination VTI-volume indicator on the Dow and NASDAQ remains positive, I must favor the Bullish Scenario. BTW, the NADSDAQ-100 (QQQ) came within 0.22 cents of its 26 January high yesterday before pulling back. This is not surprising with the Semiconductor and Computer sectors leading the Strong List. Intel (INTC) was up 0.80 cents yesterday even though the Dow fell 299 points. Hmmm?
The Sector Ratio strengthened slightly after yesterday’s trading, finishing at 14-10 negative. Semiconductors, Healthcare, Computers, Household Products, Banks, Material and Energy were the strongest sectors. The Weakest Sectors were the Autos, Transportation, Food Drug, Real Estate, and Insurance.
Continue to stay in stocks and ETFs in the Strong Sectors and avoid those on the Weak List.
Gold and mining stocks fell yesterday. My combination VTI-volume indicator moved to a neutral signal on gold.
The same indicator remains positive on most energy stocks. I used yesterday’s pullback to buy a few shares of Chevron ((CVX). But I need to see DIG strengthen and perform a ‘Rope Jump’ in the days ahead before I do anything more with energy. Right now, DIG is challenging resistance from its 200-day moving average. If it wins the battle and moves above 37.80. it would be very positive for energy in the months ahead. It would also be a very positive sign for the markets in general. Watch energy.
That’s what I’m doing,
h
Market Signals for
02-28-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS |
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