Professor’s Comments January 18, 2018
Posted by OMS at January 18th, 2018
The markets exploded higher yesterday, a day after generating what appeared to be a ‘key reversal’ day. The Dow gained 323 points, closing at 26,113. The NASDAQ and SPX gained 75 and 26 points, respectively. Volume on the NYSE was moderate, coming in at 106 percent of its 10-day average. There were 183 new highs and 56 new lows.
One thing strange about yesterday’s session was that even though the market closed near its highs, the Hi-Lo oscillator turned negative. When this happens, it usually means the rally is getting a little tired, and needs a breather before moving higher. It could also be a sign that a triangle is about to form, but after yesterday’s blow-out session, I’ll need to see a much bigger pullback before I even think triangle. The rally is still way to strong.
The cockpit indicators remain mostly positive, even with a neutral Tide. My combination VTI-volume indicator remains on a Buy Signal. It stayed on a Buy Signal even after Tuesday’s ‘key reversal’ day. As long as this indicator remain positive, I will continue to look for buying opportunities on index ETFs whenever the 2-period RSI becomes oversold. Yesterday, the 2-period RSI on the Dow finished with a reading of 98.45, which is extremely overbought. The Dow should pullback after a reading like this.
Yesterday’s rally caused the Sector Ratio to increase to 23-1 positive. This is an extremely strong ratio, with Utilities being the only weak sector. The Strong Sector List was led by FoodDrugs, Retail, Energy, Material and Healthcare. Continue to stay in stocks and ETFs in the strong sectors and avoid those in weak sectors.
Gold and most mining stocks fell yesterday. GLD dropped 1.03 to 126.14. My VTI-volume indicator on GLD remains on a Buy Signal. The indicator turned positive on 19 December with GLD at the 119.82 level. With my VTI-volume indicator on a Buy Signal AND the Material Sector (with gold) leading the Strong Sector List, I continue to look for opportunities to add to my basic position in gold and mining stocks with Rifle Trades, whenever the 2-period RSI becomes oversold. Yesterday, the 2-period RSI on GLD closed at 34.77. I’d like to see the indicator below 30 before starting to look at the short-term bars to go mining. I’d also like to see the price a little closer to the moving averages.
BTW, my target for GLD during this rally is above the 135 level. But before it can do that, it might need to form a ‘Blade’ to put on its 10-point ‘Stick’. That’s why I’m being patient and waiting for a pullback.
That’s what I’m doing,
h
Market Signals for
01-18-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS |
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