Professor’s Comments January 19, 2018
Posted by OMS at January 19th, 2018
The markets pulled back yesterday as expected after gaining over 300 points the previous day. The Dow fell 98 points, closing at 26,018. The NASDAQ and SPX fell 2 and 5 points, respectively. Volume on the NYSE was moderate, coming in at 101 percent of its 10-day average. There were 181 new highs and 94 new lows.
It appears that yesterday’s pullback was part of a small rising triangle, or Rising Wedge Pattern. If this is the case, the Dow should rally today back toward the 26,100 level before starting a larger decline early next week. Rising Wedges have targets near where they began which for this pattern is near the 25,700 level. If this happens, I would view the pullback as a buying opportunity.
The cockpit indicators remain mostly positive. The Tide is neutral, but my combination VTI-volume indicator remains on a Buy Signal. 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 67.06, which is neutral.
Yesterday’s pullback caused the Sector Ratio to decrease to 20-4 positive. This is still a very strong ratio. Real Estate, Insurance, and Telecoms joined the Utilities on the Weak List. The Strong Sector List was led by Retail, FoodDrugs, Healthcare, Transportation and Media. Continue to stay in stocks and ETFs in the strong sectors and avoid those in weak sectors.
Gold and most mining stocks continued to decline yesterday. GLD fell 0.28 cents to 125.86. The 2-period RSI fell to an oversold reading of 25.79, so GLD is now in Rifle Trading territory. 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. So, with gold and other mining stocks and ETFs oversold and in an Up Trend, I’ll be watching the short-term bars for an opportunity to add a few shares.
My target for GLD during this rally remains above the 135 level. My target for GDX, one of the gold mining ETF’s I like to trade, is near the 28 level. Yesterday GDX closed at 23.61.
That’s what I’m doing,
h
Market Signals for
01-19-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | NEG |
VTI | POS |
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Category: Professor's Comments