Professor’s Comments July 27, 2018
Posted by OMS at July 27th, 2018
The markets were mixed yesterday. The Dow continued its Up Trend, gaining 113 point to close at 25,527. The large cap index is now up 1,171 points since my combination VTI-volume indicator generated its Buy Signal. It pay$ to be on the right side of this indicator. On the other hand, the NASDAQ fell 80 points, mostly due to Facebook (FB) which dropped almost 20 percent. The decline in FB took over $119 Billion off its market cap. Before yesterday’s disaster, no stock ever lost over $100 Billion in one day. INTC and Microsoft (MSFT) came close losing $90.7B and $80.0B in 2000.
Volume on the NYSE was heavy, coming in at 116 percent of its 10-day moving average. There were 137 new highs and 31 new lows.
My combination VTI-volume indicator on the Dow remains in the Trend Zone with a reading of 77.6. As long as this indicator remains above 70, its likely the Dow will continue to trend higher. My target for the Dow in Major Wave 5 up remains at the 26,600+ level.
The VTI-volume indicator on the NASDAQ remains neutral. Two days ago, before Facebook crashed, the volume portion of the indicator warned that there could be a problem with tech stocks. So today, after FB crashed, the indicator continues to warn of potential problems with tech stocks. Also, The Tide on the NASDAQ is now negative. Are these indicators trying to tell us something? The P-volume on the NASDAQ has turned negative, but the Coach, my money flow indicator, still slightly positive. As long as the VTI-volume indicator and the Coach remain positive, the price of the index will likely continue to push higher. But students should realize that the majority of tech stocks are NOT moving higher with the index. That’s what a negative A-D oscillator tells me. Be extremely careful with tech stocks now.
My combination VTI-volume indicator on the SPX (SPY) remains on a Buy Signal and in the Trend Mode.
TBT, the inverse ETF for Bonds, gained 0.14 cents yesterday as Bonds were mostly flat. The ETF still appears to be forming the ‘Blade’ of a Hockey Stick Pattern as it trades just above its 50 and 200-day moving averages. I continue to look for opportunities to Buy a few shares of TBT, as I believe interest rates are going higher.
The 2-period RSI on TBT remains overbought with a reading of 84.4. So, with the ETF overbought and a VTI reading of 66.6, which is NOT in the Trend Zone, it should continue to trade near its moving averages. If TBT pulls back from its overbought conditions, I’ll buy a few shares. TBT remains just below the leaders on the Dean’s List. BTW. IF the VTI moves above 70 and the ETF enters the Trend Zone, it will force my purchase.
There were no changes to the Sector Ratio after yesterday’s session. The ratio remains at 18-6 positive. As long as the Sector Ration remains positive, its likely that prices on the indexes will continue to push higher. It’s when the ratio starts to turn negative when I’ll begin to worry. Not now.
The Strong List continues to be dominated by defensive sectors with technology noticeably lacking. Last night, the Transportation Sector moved to the top of the Strong Sector List, followed by PharmaBio, Consumer Products, Food Drugs, and Retail. Cap Goods, and Financials are still on the Strong List near the bottom.
The Weak Sector List was led by Autos, Household Products, Energy, Leisure, and Materials. I continue to avoid these sectors. Students should note how GM and Ford continue to fall, even after Wednesday’s agreement on reducing automobile tariffs was announced. It appears that the market feels that the agreement won’t help F and GM sell its products overseas. Interesting. BTW, my combination VTI-volume indicator on F turned negative on 15 June with the stock selling at 11.88. Yesterday, F closed at 9.89.
Gold and the miners fell again yesterday. GLD dropped 0.91 cents to close at 115.71. I’m still watching the VTI-volume indicator on GLD to see if it will generate a Buy Signal. I’m also watching for the Materials Sector to move to the Strong Sector List. It hasn’t happened yet. GLD is now down almost 6 points since the VTI-volume indicator generated a Sell Signal on 15 June. Again, pay attention to these signals.
That’s what I’m doing,
h
Market Signals for
07-27-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | NEG |
VTI | POS |
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