Professor’s Comments June 25, 2019
Posted by OMS at June 25th, 2019
The markets were mixed yesterday. The Dow was up 8 points, closing at 26,727. The Dow got as high as 26,808 during the session, which is a new all-time high. The NASDAQ and SPX were down 26 and 5 points, respectively. Volume on the NYSE was moderate, coming in at 93 percent of its 10-day moving average. There were 146 new highs and only 13 new lows.
There was a change to the market timing indicator for the Russell 2K. It moved to a Sell Signal. The Dow, NASDAQ, and SPX remain on Buy Signals.
The Tide, Dean’s List, and DMIs remain positive. The Money Flow indicators on the Dow and NASDAQ remain positive.
The Dow appears to be in Wave ‘C’ up that has a target near or slightly above the 27,000 level. The upside target for the NASDAQ is near the 8,100 – 8,200 level. Yesterday, the NASDAQ closed at 8,005 which was still below its recent high of 8,089. Students should understand that Wave ‘C’ up is likely the final wave of a termination pattern that can end at any time. The markets DO NOT have to reach their projected targets as Wave ‘C’ up can easily truncate.
The Sector Ratio stayed at 12-12 Neutral after yesterday’s session. The Strong Sector List was led by Household Products, Real Estate, Insurance, Telecoms, and Media. The Weak Sector List was led by Service, Energy, Retail, Transportation, and Autos.
The Transportation Sector needs to be watched now. There is a strong possibility that the trannies are forming the right shoulder of a major Head & Shoulders Pattern. If this is the case, the Dow Transportation Index, which is currently trading near 10,350 could begin a decline to a neckline near 9,600 which if broken, projects a pattern target near 8,300 or lower. The fact that this pattern could be forming should be taken seriously, as it has major implications for the Dow Industrials and other major U.S. indexes. If you own transportation stocks, and many of us here in Jacksonville do, you need to start paying attention to the development of this potential H&S Pattern.
Model Portfolio: The Model continues to hold 1,000 shares of TWM, an Ultra Short (3x) inverse ETF for the Russel 2K. TWM made a nice move yesterday, gaining 0.35 cents to 15.51. If the ETF pulls back during the next day or so, the Model will look to add to its position.
After yesterday’s session, the Model’s cash position remains at $102,345. The Model has now gained $17,814 since inception or 17.81 percent which translates to an annualized IRR of 64.61 percent. BTW, I have received a few emails within the past week or so from professional money managers, congratulating me on the Model’s performance. Yeah, up 17 percent in a few months is nice, but if you add in the performance of the ‘test model’ since 7 January to the Model, the theoretical return is just under 40 percent, which puts the annualized IRR just under 80 percent! That’s my number ;>)
The Model continues to watch Bonds. Yesterday, TMF rose 0.56 cents to 24.83. The ETF still appears to be developing a major topping pattern, which includes a ‘Star’ reversal. This is coming at a time when Bonds are at their projected target high. Right now, the indicators are still positive on Bonds, but if they turn negative, I will likely use some of the available cash in the Model to add a few shares of TBT to the portfolio.
With major topping patterns beginning to develop in equities, transports and Bonds, I want my students to start becoming familiar with some of the vehicle I use to trade these markets. You don’t always have to focus on stocks! Many times, there are other, better, opportunities in the market than equities. And we could be approaching one of those times. For example, we just saw one of these opportunities develop in the gold market. Well, if you liked the gold trade, shorting Bonds with TBT could be better! Shorting the trannies could be better! Shorting the RUT with TWM could be the best! As I’ve been saying, Bonds are a good indication of what is going on in the economy and the equity markets. If Bonds start to decline, it means that long-term interest rates are rising. This causes the price of homes and autos to become less affordable. This is one of the reasons you’re seeing the Auto Sector on the Weak List. And now the transports are on the Weak List. They too need to be watched.
Right now, it’s still too early to start shorting Bonds or the trannies as the indicators are still positive. But the patterns that continue to develop should be taken seriously, as they could be warning of trouble ahead. Please pay attention to these warnings, especially if the indicators begin to turn negative.
Gold remains EXTREMELY overbought at current prices. Hey, I loved gold at 120. I don’t even like it at 134! The pattern suggests that GLD should see wave 1 up top near 134-135. After that, GLD should begin a Wave 2 pullback that could reach the 129 level. If this happens, the pullback will form the ‘Blade of a Hockey Stick Pattern allowing me to load my truck up with gold. Seeing a Hockey Stick develop will confirm (to me at least) that gold is heading for the 1,600+ level as Wave 3 up begins to unfold. So, 129-130 is where I’ll begin to like gold again. Not now!
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
06-25-2019
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 | NEU | 14 Jun 2019 |
BONDS | POS | 19 Jun 2019 |
CRUDE OIL | NEU | 24 Jun 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