Professor’s Comments July 17, 2018
Posted by OMS at July 17th, 2018
The markets were mixed yesterday. The Dow rose 45 points, closing at 25,064. The NASDAQ and SPX were down 20 and 3 points, respectively. Volume on the NYSE was moderate, coming in at 101 percent of its 10-day moving average. There were 45 new highs and 54 new lows.
Yesterday’s rally in the Dow tested the upper trend line of the triangle that has been developing since late January. Trend lines tend to be resistance levels, so it will be interesting to see if this upper trend line is broken. If it is, nest step for the Dow would be a test of the 26, 600+ level, which is the 26 January high.
My combination VTI-volume indicator on the Dow remains on a Buy Signal, but with a reading of 63.4 remains slightly below the Trend Zone. The same indicator on the NASDAQ and SPX (SPY) is in the Trend Zone.
After yesterday’s trading, the 2-period RSI on the Dow finished with an overbought reading of 85.9. So with the VTI-volume indicator is still NOT in the Trend Zone, it’s likely the market will pause to catch its breath. If the ‘pause’ results in a pullback, students should watch the 2-period RSI on the Daily chart to help identify buying opportunities.
Three of the breadth indicators on the NYSE turned negative after yesterday’s trading, turning The Tide neutral. At this point I wouldn’t worry too much about The Tide, as a slight pullback in the markets would be normal. After all, the Dow is now up almost 700 points since my combination VTI-volume indicator moved to a Buy Signal. And because the large cap index is at resistance, it might require a few days of sideways trading (resting) before it can punch through. As long as the VTI-volume indicator remains on its Buy, I’m not worried. Same for the NASDAQ and SPX.
The Sector Ratio slipped to 17-7 positive after yesterday’s session. This remains a very positive ratio. It tells me that 71percent of the sectors in the S&P 500 are moving higher. This is the type of market breadth that one would expect during a major rally. Once the impulse wave of the sequence (Wave 3 up) begins, look for the Sector Ratio to get even stronger. On the other hand, IF the Sector Ratio starts to turn negative, it would be a major warning.
The Strong Sector List was led by PharmaBio, Computers, Consumer Products, Food Drugs, and Retail. The Semiconductors, Cap Goods, and Financial Sectors are still on the List near the bottom. I continue to watch for one or more of these ‘aggressive’ sectors move into the top 5 sectors. Once that happens, it will likely signal that Wave 3 up of Major Wave 5 up is underway.
Gold and the miners fell lightly yesterday. GLD finished down 0.06 cents at 117.55. My combination VTI-volume indicator for GLD and SLV remains on a Sell Signal. However, the volume portion of the indicator continues to show positive divergence, so the metals could be forming a major bottom. Students should continue to watch HUI, the gold miners index, for it to start moving above its 50 and 200 day moving averages. If this happens, it would be a strong signal that Major Wave 3 up is starting.
That’s what I’m doing,
h
Market Signals for
07-17-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | NEG |
VTI | POS |
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