Professor’s Comments January 23, 2019
Posted by OMS at January 23rd, 2019
The markets fell hard yesterday after several of my indicators pointed toward a potential top. The Dow dropped 302 points to close at 24,404. The NASDAQ and SPX were down 137 and 38 points, respectively. Volume on the NYSE was moderate, coming in at 101 percent of its 10-day moving average. There were 15 new highs and 28 new lows.
Yesterday’s decline caused Friday’s Spinning Top on the NASDAQ to turn into an Evening Star. The three candle pattern is a bearish reversal pattern that usually occurs at the top of an uptrend. If the markets topped on Friday, it means that sub-Wave 2 up is over and Wave 3 down of Major Wave 3 down is about to begin. We’ll see.
There were no changes to any of my market timing indicators after yesterday’s session. The Dow, NASDAQ, SPX and RUT remain on Buy Signals. The Dean’s List and Tide also remain positive. During the day, the 60 min CCI on several indexes, including the DIA, came close to turning negative. However, the late rally caused the CCI to finish above the zero line, so I continue to wait to establish my short (inverse) positions.
BTW, several of the stocks I watch generated the first part of a VTI-volume Sell Signal yesterday. So now that the ‘volume’ portion of the Sell Signal is in, I need to see the momentum turn negative. This has not happened yet. It’s just another reason why I continue to wait.
As the government shutdown drags into day 33, two of the stocks I’m watching are Walmart (WMT) and McDonalds (MCD). I’m NOT thinking about shorting these stocks even though both stocks have relatively high P/Es. But I’m watching because both are Dow stocks, and both remain in Up Trends while many of their competitors have already entered down trends (50<200). If the shutdown continues, WMT and MCD could be impacted by a delay in the government’s food stamp program. So far, the shutdown hasn’t really impacted the economy. However, IF it continues into February, over 40 million Americans that depend on the stamps to afford groceries will be impacted. IF people can’t buy food, consumer confidence, which is about 68 percent of the U.S economy, will start to decline. And any decline in consumer confidence now will impact the equity markets.
The Sector Ratio flipped back to negative after yesterday’s session. The Ratio is now 11-13 negative The Strong List was led by Real Estate, Banks, Consumer Products, Financials and Transportation. The RS ratings of the top Sectors on the Strong List remains low, mostly 1s and zeros. The Weak List was led by FoodDrug, Healthcare, Food, Technology, and Autos.
Gold (GLD) rose 0.436 cents to 121.45. GLD still appears to be forming a small triangle on its Daily chart. Triangles are usually Bullish Patterns, so I still view any pullback in GLD to the 118-119 level as a Buying opportunity. Both gold and the miners remain on a Neutral Signal.
That’s what I’m doing,
h
Market Signals for
01-23-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 08 Jan 2019 |
NASDAQ | POS | 07 Jan 2019 |
GOLD | NEU | 18 Jan 2019 |
U.S. DOLLAR | POS | 18 Jan 2019 |
BONDS | NEG | 18 Jan 2019 |
CRUDE OIL | POS | 08 Jan 2019 |
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Category: Professor's Comments