Professor’s Comments June 14, 2019
Posted by OMS at June 14th, 2019
The markets staged a moderate rally yesterday on low volume. The Dow finished with a gain of 102 points, closing at 26,107. The NASDAQ and SPX were up 44 and 12 points, respectively. Volume on the NYSE was low, coming in at 89 percent of its 10-day moving average. Low volume rallies are usually not sustainable. There were 124 new highs and 47 new lows.
Yesterday’s rally caused the market timing indicators on the NASDAQ and SPX to turn positive joining the Dow and Russell 2K on Buy Signals.
Yesterday’s rally DID NOT do anything to change the overall patterns. The Head Shoulders Pattern that has been developing on the Dow for the past several weeks is still very much in play. A decline below the 3 June low of 24,680 would confirm the pattern. IF the pattern is confirmed, the target for the Dow would be the 26 Dec 2018 low of 21,713. Otherwise, as long as the market timing indicators remain positive, the Dow should continue to push higher. Just remember, that the markets are in termination patterns that can terminate at any time. This is NOT the time to be aggressive!
The Tide, Dean’s List and DMIs remain positive. The Money Flow indicator on the Dow remains negative, while the same indicator on the NASDAQ remains slightly positive.
The Sector Ratio improved 12-12 Neutral after yesterday’s session. However, six of the sectors on the Strong List have RS Ratings of zero, so the List is still not very strong. If the market has a down day today, many of these sectors will likely drop off the Strong List turning the Sector Ratio negative again. The Strong Sector List was led by Real Estate, Household Products, Food Drugs, Media, and Telecoms. The Weak Sector List continues to be led by Service, Energy, Retail, Utilities and Healthcare.
Model Portfolio: About an hour before yesterday’s close, when it started to become clear that gold was breaking out of its wave 2 down and starting wave 3 up, the Model purchased 500 shares of UGL at 39.67 and 250 shares of NUGT at 20.80. So now the Model is close to a full position in gold. If gold pulls back, even slightly, the Model might consider buying a few shares of GDX, an ETF for the gold miners. It might even over-weight its gold position. BTW, just so you know, I bought a few shares of GDX for my own portfolio yesterday.
Crude Oil spiked higher at the start of yesterday’s session on news that two oil tankers were attacked in the Persian Gulf. SCO dropped 1.83 points on the news but finished only 0.99 cents lower. Luckily, the Model sold its shares of SCO the previous day when it had a nice profit. Anyhow, the question now is what to do about crude? Remember, crude oil is in a triangle. It is NOT trending, so we trade small positions and take profits quickly. Right now, the indicators on SCO are still positive and the ETF is still near the top of the Dean’s List. If it weren’t for the fact that ships in the Gulf are being torpedoed, I’d really like to be short crude oil. There’s way too much crude available for the current economic conditions. But given the tensions in the Gulf, I think it best to stay on the sidelines and use some of the money to overweight gold.
Here’s the deal: Gold is beginning to trend higher. It has a projected target near or above 1,600. Crude oil will likely be stuck in a triangle for the next 8-12 months. Can money be made trading crude oil while it’s developing the triangle? Yes!!! But whenever I have a choice to trade something that is trending or has the potential to trend, vs. something that is non-trending, I choose the vehicle that is trending every time. It’s just a lot easier trade.
After yesterday’s session, the Model’s cash position was $90,727. The Model has now gained $15,794 since inception or 15.8 percent which translates to an annualized IRR of 63.2 percent. For comparison, the unmanaged SPX is currently showing a gain of 1.3 percent during the same period.
The Model continues to watch Bonds. Yesterday, Bonds rose slightly with TMF gaining 0.24 cents to 24.19. The VTI-volume indicator on TMF remains positive as the ETF remains on the Dean’s List. Bonds continue to show negative divergence, so they should peak near the 156-157 level. After that, Bonds should begin a massive decline dropping them to the 130 level or lower. If this happens, the resultant rise in interest rates will wreck the American economy and cause chaos in the equity markets. So, we need pay attention to Bonds during the next few weeks, probably more so than the equity markets. If TMF and TLT remain on the Dean’s List, the current rally in equities will likely continue. But IF TBT, the inverse Bond ETF, replaces TMF and TLT, it will time to exit the equity markets and begin looking at inverse index ETFs.
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
That’s what I’m doing,
h
Market Signals for
06-14-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 05 Jun 2019 |
NASDAQ | POS | 13 Jun 2019 |
GOLD | POS | 03 Jun 2019 |
U.S. DOLLAR | NEG | 03 Jun 2019 |
BONDS | NEU | 10 Jun 2019 |
CRUDE OIL | NEG | 23 May 2019 |
One hour video recorded from May 28, 2016 The Professor’s Signs of a Major Market Turn – Prospectives and the Projected Timing and Levels One hour streaming video – includes webinar handouts The Professor usually holds an update class whenever the Market looks like it may be making a major turn. If you have been following the Professor’s Comments you know that a turn is due….. LEARN MORE
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.
Category: Professor's Comments