Professor’s Comments January 15, 2019
Posted by OMS at January 15th, 2019
The markets pulled back yesterday on light volume. The Dow finished 86 points lower at 23,910. The NASDAQ and SPX were down 66 and 14 points, respectively. Volume on the NYSE was only 94 percent of its 10 day moving average. There were 14 new high and 22 new lows.
The current rally continues to look tired from both a volume and breadth perspective. However, with the Dow and NASDAQ market timing signals still on Buy Signals, it’s possible the market can continue to push slightly higher.
Yesterday’s early decline and late rally was NOT impulsive. It did NOT change any of my market timing indicators for equities. Also, because yesterday’s decline and late rally appeared to form the final waves of small triangle pattern that has been developing for the past week, it’s likely the markets will attempt one more rally before throwing in the towel. I would not expect any rally to go much beyond the 24,250 level on the Dow. The 50-day moving average on the Dow is currently located at the 24,205 level and should provide strong resistance to any short-term rally.
BTW, yesterday I received an early email from Linda B. telling me that the CCI on her hourly charts had turned negative. This came as a surprise because the CCI on my hourly charts was still a long way from crossing the zero line. If you use the ThinkorSwim (ToS) Platform and saw the same thing on your charts, it’s probably because you have them set to include data from the Extended Hours Trading Session. This should be changed as data from the Extended Hours Trading Session distorts the values of the indicators.
To make the change, click on the ‘Gear’ next to the ‘Flask’ at the top of the ToS screen. Then click on “Equities’. Go to the bottom of the screen and remove the check mark in the box for the Extended Hours Session. Then click the ‘Save’ button at the bottom of the screen. This will remove the grayed out areas of the Extended Hours Session and your trading screen will appear all black.
The Sector Ratio strengthened to 18-6 negative after yesterday’s session. The Strong List was led by Retail, Consumer Products, Autos, Media, and PharmaBio. Except for the top sectors, the RS ratings of the Strong Sectors remains weak. This tells me the current Wave 4 rally is nearing completion.
Because of this, I continue to watch the 35-period CCI on the 60 min bars of the DIA, waiting for it to turn negative. Once the CCI turns negative, I will start buying and holding inverse index ETFs as they start to appear on the Dean’s List. Be patient.
Gold (GLD) rose 0.29 cents to 122.09. GLD is slightly overbought at current levels and could pull back in the days ahead. The reason I feel GLD could pullback is because the gold miners are still on a Neutral Signal. If the miners move to a Buy Signal, I’d have to buy my ticket to ride. But right now, I’m just waiting. I still view the 118-119 level as a buying opportunity for GLD.
That’s what I’m doing,
h
Market Signals for
01-15-2019
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 08 Jan 2019 |
NASDAQ | POS | 07 Jan 2019 |
GOLD | POS | 27 Dec 2018 |
U.S. DOLLAR | NEG | 27 Dec 2018 |
BONDS | NEU | 10 Jan 2019 |
CRUDE OIL | POS | 08 Jan 2019 |
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