Professor’s Comments January 24, 2019
Posted by OMS at January 24th, 2019
The markets opened yesterday with an impulsive decline, but then spent the rest of the day in a corrective wave up. The Dow finished 171 points higher at 24,575. The NASDAQ and SPX were up 5 and 6 points, respectively. Volume on the NYSE was low, coming in at 89 percent of its 10-day moving average. There were 22 new highs and 19 new lows.
Yesterday’s afternoon rally appeared to be a corrective a-b-c wave 2 within an impulsive wave down. If this is analysis is correct, wave 2 might need another small rally wave, a wave ‘c’ up, to complete the pattern before the market starts down again.
Technology stocks on the NASDAQ and small cap stocks on the RUT did not fair nearly as well as their large cap sisters yesterday. The past two days of trading action on the NASDAQ-100 (QQQ) has turned the DMI on technology stocks back to negative. This DMI change could mean that Wave 2 up on technology and small cap stocks is complete. Students should begin to watch for impulsive moves to the downside on technology and small cap stocks. Any impulsive move down now will be a good indication that Wave 3 down has started.
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.
The Sector Ratio flipped back to positive after yesterday’s session. The Ratio is now 15-9 positive. The Strong List was led by Real Estate, Banks, Consumer Products, Financials and Service. The RS ratings of the top Sectors on the Strong List remains low, mostly 1s and zeros. The Weak List was led by FoodDrugs, Food, Autos, Energy, and Healthcare.
Gold (GLD) fell 0.17 cents to 121.28. GLD continues to form a small triangle on its Daily chart. The triangle appears to be a small wave 4. Triangles are usually Bullish Patterns, so once the triangle completes, gold should begin to push higher. 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.
The Crude Oil ETF, UCO, appears to be forming a Bullish inverse Head & Shoulders bottoming pattern on the Daily charts. The left shoulder of this pattern formed in late November – early December near the 18+ level. The ‘Head’ was the 26 December low of 12.2. So, IF UCO begins to break above 50-day moving average resistance currently at the 18.45 level, the pattern suggests UCO will rise to the 24 level which is where the 200-day moving average is currently located. Students should watch crude and energy stocks as we move into the generally Bullish February-April time period.
BTW, with the Energy Sector still on the Weak Sector List, students should also watch for the Sector to drop off the Weak List and begin to strengthen. If this happens, it will confirm the Bullish Head& Shoulders pattern.
That’s what I’m doing,
h
Market Signals for
01-24-2019
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
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