Professor’s Comments July 18, 2018

Posted by OMS  at July 18th, 2018

The markets rose modestly yesterday.  The Dow finished up 56 points, closing at 25,120.  The NASDAQ and SPX were up 49 and 11points, respectively. Volume on the NYSE was heavy, coming in at 111 percent of its 10-day moving average.  There were 67 new highs and 26 new lows.

The Dow remains at a critical juncture this morning, testing upper trend line resistance.  If it can break through this resistance, and start trading above the 25,200+ level, it will be a good indication that Major Wave 5 up is underway.  Otherwise, there is a possibility that the Major Wave 4 triangle is still not complete, and prices could fall back to the 24,000 level to complete sub-wave ‘c’ of Wave ‘e’ down. 

One of the reasons I’m still concerned about Wave 4 not being complete has to do with my combination VTI-volume indicator.  With a reading of 65.0, it’s still not in the Trend Zone (>70).  So, with the 2-period RSI overbought at 90.9, and no trend in place, the Dow is vulnerable to a pullback.  A move above 25,225 -25,250 would negate this possibility and cause the VTI-volume indicator to move above 70, confirming that Major Wave 5 up is underway. My target for Major Wave 5 up remains at or above the 26,617 level.

The VTI-volume indicator on the NASDAQ and SPX remains on a Buy Signal and in the Trend Zone.  With the VTI-volume indicator in the Trend Zone, I would view any pullback on these indexes as buying opportunities. 

The Sector Ratio increased slightly 18-6 positive after yesterday’s session.  This remains a very positive ratio.  As long as the Ratio remains positive, the odds for a rally back to or above the 26 January high of 26,617 remains high.

The Strong Sector List continues to be led by Computers, PharmaBio, Consumer Products, Food Drugs, and Retail.  The Semiconductor Sector has moved to the middle tier of the List. Cap Goods, Financials, and Technology are still 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 yesterday. GLD was down 1.27 points to 116.26.  My combination VTI-volume indicator for GLD and SLV remains on a Sell Signal.  GLD is now down 5.06 points since my combination VTI-volume indicator generated a Sell Signal on 15 June.  I’m not buying gold or mining stocks until this indicator turns positive.

That’s what I’m doing,

h

Market Signals for

07-18-2018

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