Professor’s Comments June 26, 2018
Posted by OMS at June 26th, 2019
The markets pulled back yesterday after disappointing news on consumer confidence and new home sales. Consumer confidence dropped to 121.5 in June, after a downwardly revised reading of 131.3 in May. New home sales fell 7.8%, as sales plunged in the pricier Northeastern and Western markets. During the first five months of the year, new home purchases have fallen 3.7% compared to the same period in 2018. The poor economic numbers are further evidence the economy is slowing. The Dow finished with a loss of 179 points, closing at 26,548. The NASDAQ and SPX were down 121 and 28 points, respectively. Volume on the NYSE was moderate, coming in at 108 percent of its 10-day moving average. There were 104 new highs and 80 new lows.
There were no changes to the market timing indicators. The Dow, NASDAQ, and SPX remain on Buy Signals. The Russell 2K remains on a Sell Signal.
Yesterday’s decline caused The Tide to turn negative. A negative Tide means that most stocks on the NYSE are starting to move lower. The Dean’s List turned neutral as TWM, the inverse ETF for the Russell 2K, made its first appearance on the List in several weeks.
The DMIs for the Dow and NASDAQ remain positive while the Money Flow indicators on the same indexes have turned Negative.
The Dow is likely in the process of completing the final waves of Wave ‘C’ up. While the target for the pattern is near or slightly above the 27,000 level, the final wave of a termination pattern does not have to reach its projected target. It can truncate and end at any time. This means that we need to be watching the market timing indicators for changes.
The Sector Ratio weakened to 17-7 Negative after yesterday’s session. So now, more sectors are moving down than moving up. 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.
Students should continue to watch the Transportation Sector as it continues to develop the right shoulder of a major Head & Shoulders Pattern. Yesterday, IYT, the Transportation RTF fell 1.54 points to 181.91. One of my algorithms highlighted several railroad stocks last night, including CSX, as shorts. Again, IF the Dow transports begin to break down, (see yesterday’s Comments), they should begin by testing the ‘neckline’ near 9,600. If this level is broken, the H&S Pattern projects a target near 8,300 or lower. That’s about a 20 percent decline from current levels! The fact that this pattern could be forming should be taken seriously, as it has major implications for the Dow Industrial and other major U.S. indexes. If you own transportation stocks, you need to start paying attention to the development of this potential H&S Pattern.
BTW, the ‘neckline’ on the H&S Pattern on IYT is near the 176 level. Anything below 176 would spell trouble for the transports.
Gold pulled back yesterday after being EXTREMELY overbought. The pattern suggests that GLD could decline to the 129-130 level during corrective wave 2 down. If this happens, the resulting Hockey Stick Pattern will become a springboard for significantly higher gold prices. All I’m doing now is watching and waiting.
Model Portfolio: The Model bought an additional 500 shares of TWM during yesterday’s session. Price paid was 15.40. So now the Model holds 1500 shares of the Ultra Short (3X) inverse ETF for the Russel 2K. The Model bought the additional shares to trade a potential decline in the Russell 2K during the next few weeks. If the market timing indicators for the Dow and NASDAQ turn negative during the next few days, shares of inverse leveraged ETFs, like DXD and QID, will be added to the Model. But not until the indicators turn negative. That’s because the current pattern on the Dow and NASDAQ still allows for higher prices after a small pullback. Same for shares of TBT, which the Model is watching closely.
The Model has now gained $18,230 since inception or 18.23 percent which translates to an annualized IRR of 66.39 percent. The Model is currently holding $94,809 in cash.
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
06-26-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
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