Professor’s Comments January 29, 2019
Posted by OMS at January 29th, 2019
The markets fell hard early yesterday, then rallied into the close. The Dow finished down 209 points, closing at 24,528. The NASDAQ and SPX were down 79 and 21 points, respectively. Volume on the NYSE was moderate, coming in at 99 percent of its 10-day moving average. There were 40 new highs and 22 new lows.
Yesterday’s early gap down decline was impulsive. However, there was no follow through as the markets spent the rest of the day correcting the early decline. So, given that the Dow formed an Evening Star Pattern on Friday. it’s possible that yesterday’s early decline and late corrective rally were sub-waves 1 and 2 of a new decline. If so, a strong sub-wave 3 down should begin soon.
The markets could experience a lot of volatility this week as the Fed meets to discuss its latest policy on interest rates today with an announcement scheduled for 2pm tomorrow. Also, the results of trade talks between China and the U.S. will be announced later this week. Both of these announcements could produce large moves in the market.
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. However, the DMI on the NASDAQ-100 (QQQ) turned negative after yesterday’s session. In doing so, it was the first major indicator to turn negative. The Q’s should be watched closely now because they are already in a down trend with their 50 below the 200.
The 35-period CCI on the 60 minute chart of the Dow finally turned negative. This was enough for me to begin buying a ‘trial’ position in Dow related inverse ETFs. I’m only buying a ‘trial’ position now because my key market timing indicators for equities are still on Buy Signals and there are no inverse index ETFs on the Dean’s List. So, I must wait for this to change before establishing a larger inverse (short) position. I’m being patient.
The Sector Ratio remained at 12-12 positive after yesterday’s session. The Strong List was led by Semiconductors, Banks, Real Estate, Financials, and Transportation. The Weak List was led by Food Drugs, Telecoms, Healthcare, Household Products, and Food.
Gold (GLD) rose 0.43 cents to 123.29 and remains on a Buy Signal. However, even though the miners rose yesterday, they remain on a Neutral Signal.
That’s what I’m doing,
Market Signals for
|DOW||POS||08 Jan 2019|
|NASDAQ||POS||07 Jan 2019|
|GOLD||POS||25 Jan 2019|
|U.S. DOLLAR||NEU||28 Jan 2019|
|BONDS||NEU||28 Jan 2019|
|CRUDE OIL||NEU||28 Jan 2019|
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