Professor’s Comments January 25, 2019
Posted by OMS at January 25th, 2019
The markets continued their choppy trading yesterday. The Dow finished down 22 points, closing at 24,593. The NASDAQ and SPX were up 48 and 4 points, respectively. Volume on the NYSE was low, coming in at 75 percent of its 10-day moving average. There were 32 new highs and 22 new lows.
The last three days of choppy up-down-up trading has caused a small triangle to form on the Dow. Triangles are continuation patterns, so the markets could see a small rally today. The wave count suggests the rally could be part of final wave ‘c’ up of Wave 2 up. If this analysis is correct, the markets could be approaching a significant interim top with Wave 3 down next.
There were no changes to any of my market timing indicators for equity indexes 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 increased to 17-7 positive after yesterday’s session. The Strong List was led by Semiconductors, Consumer Products, PharmaBio, Retail and Computers. The Weak List was led by Food Drugs, Food, Autos, Energy, and Telecoms.
Gold (GLD) fell 0.19 cents to 121.09. The volume portion of my VTI-volume indicator on GLD turned negative after yesterday’s session turning my timing indicator Neutral. So now, both gold and the miners are on a Neutral Signal.
The Crude Oil ETF, UCO, continues to trade just below its 50-day moving average. By moving sideways, the ETF appears to be forming the right shoulder of a Bullish inverse Head & Shoulders bottoming pattern. If you look closely at a daily chart, you will see that the left shoulder of this pattern, which formed in late November – early December near the 18+ level, is also a sideways move. So, the two shoulders are similar which is positive. I’m still watching UCO to see if it can break above the 18.45 level. If it does, the pattern suggests UCO will rise to the 24 level which is where the 200-day moving average is currently located. Students should continue to watch crude and energy stocks as we move into the usually Bullish February – April time period.
Another reason for watching energy now is that 4 of the top 5 ETFs on the Dean’s List are related to Crude Oil. Also, DIG is back on the List near the middle of the pack. If you look at how these energy related ETF are trading, they all appear to be doing the same thing…trading just under or near their 50-day moving averages. So, IF UCO begins to break out, odds are that all of them will start moving up. Continue to watch for a breakout in crude oil and energy.
BTW, most of the energy related stocks I usually trade, like refiners VLO and MRO, are on Neutral Signals. Producer-distributer CVX and explorer SLB are on Buy Signals. Their patterns are very similar to the pattern on UCO.
That’s what I’m doing,
h
Market Signals for
01-25-2019
DMI (DIA) | POS |
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 | NEU | 24 Jan 2019 |
U.S. DOLLAR | POS | 18 Jan 2019 |
BONDS | POS | 23 Jan 2019 |
CRUDE OIL | POS | 08 Jan 2019 |
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