Professor’s Comments January 14, 2020
Posted by OMS at January 14th, 2020
The Dow finished with a gain of 83 points yesterday, closing at 28,907. The NASDAQ and SPX were up 95 and 23 points, respectively. Volume on the NYSE was moderate, coming in at 100 percent of its 10-day moving average. There were 243 new highs and 23 new lows.
Yesterday’s rally kept the Dow below the critical 28,927 level, a level I’m using as the high for minor wave 2 up. The reason this high is important is because the impulsive decline from last Friday’s high of 29,009 into Friday’s low of 27,708 could have been wave 1 down of the next Bearish sequence. If this is the case, the Dow needs to stay below 28,927 for the Bearish case to hold. Otherwise, a upside break of 28,927 would mean the rise is likely wave ‘b’ up of an a-b-c pattern for a minor wave 4 and that the next decline, probably down to 28,750, would be the completion of wave ‘c’ down of minor wave 4. Then once wave 4 down completes, the Dow will likely rally into next week to re-test Friday’s high.
Bottom line: IF, and it’s a big IF, the Dow stays below 28,927, there’s a good chance that the Dow topped last Friday and minor wave 3 down is starting. On the other hand, IF 28,927 is broken, the current rally in the markets could go on for another week or so. There’s a potential market turn date occurring tomorrow, January 15, so stocks could turn within the next few days. We’ll see….
The Dow, SPY, NASDAQ, and Russell 2K remain on Buy Signals. Yesterday’s rally turned The Tide and Dean’s List back to Positive again.
Because I believe the 28,927 level is critical in determining the next major move in the markets, students should remain on FULL RED ALERT and look for changes to the market timing indicators. Any negative turn in the indicators now will likely signal that the top is in and the next Bear market is underway.
The Sector Ratio strengthened to 17-7 after yesterday’s session. That’s off its recent highs where it had been trading over 21-3 positive, but still not enough to start becoming aggressively negative. Right now, there’s only one Sector, Household Products, with a with a strong RS rating of 4. The rest are mostly 1s and zeros, with a few 2s. Again, seeing Household Products leading the Strong List is NOT comforting to me. The Weak Sector List was led by Autos, Service, Banks, Utilities, and Telecoms. The economically sensitive Transportation sector has moved up to the #6 position on the Weak List. If the market begins to move lower in the days ahead, stocks in the sectors on the Weak List should lead the market lower.
Model Portfolio: There were NO CHANGES to the Model after yesterday’s session. The Model continues to hold 1,500 shares of DXD, 300 shares of SQQQ and 500 shares of TMF with a cash balance of $75,587.
The market timing signals for Gold, the Dollar, Bonds, and Crude Oil remain at a point where they could begin to change this week if the equity markets begin to roll over. I want to see what happens in equities before committing funds to these markets.
That’s what I’m doing.
h
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
Market Signals for
01-14-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 11 Dec 2019 |
NASDAQ | POS | 12 Dec 2019 |
GOLD | NEU | 09 Jan 2020 |
U.S. DOLLAR | NEU | 08 Jan 2020 |
BONDS | NEU | 02 Jan 2020 |
CRUDE OIL | NEG | 10 Jan 2020 |
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