Professor’s Comments March 22, 2018

Posted by OMS  at March 22nd, 2018

I’m still having internet problems this morning. Comcast is coming to my house later today, so hopefully I’ll be back up to full capability by tonight. Meanwhile I’m operating from a T-Mobile hotspot.

The markets appeared to put in a reversal day yesterday. The Dow was up over 250 points early, then fell hard after new Fed chair Powell announced a quarter percent increase in short-term interest rates. The Dow finished down 45 points, closing at 24,692. The NASDAQ and SPX finished down 19 and 5 points, respectively.

Most of my indicators remain negative after yesterday’s session. So with my VTI-volume indicator still showing No Trend and the the Dow stuck between 24,000- 25,300, its likely that the triangle is not complete.

After looking at yesterday’s action, it’s very possible that yesterday’s early rally and late decline was part of wave ‘c’ of the triangle pattern, not wave ‘e’, If this is the case, the triangle still needs to develop a few more legs before a breakout occurs. If yesterday’s decline was the start of sub-wave ‘c’ down within wave ‘c’ down, the Dow could fall to the 24,100 level before wave ‘c’ completes, then rise to about 25,000+, then fall again to about 24,400 before all five waves of the triangle are finished. In other words, it could take another several weeks of volatile trading before the market starts to Trend again. The fact that the VTI-volume indicator remains in the NO TREND Zone supports this analysis.

So be patient and continue to scalp trade the short-term bars. This is NOT the time to be holding large positions overnight, especially IF the Dow starts to approach the 24,000 level. Remember, the Bearish Scenario is still alive and well, and a break of 24,000 would suggest the Bull Market that started in March 2009 is over and a new Bear has begun.

Also, realize that yesterday’s Fed action was yet another signal about its intentions to pull money out of the market and slow, not grow, the economy. If you haven’t realized it yet, the Fed is now using ALL the tools it has at its disposal. Through its Quantitative Unwinding Program, It’s selling off securities on its balance sheet to the tune of billions per month. And now its raising interest rates at the same time. Both of these measures will make less money available to grow the economy. So even if the triangle completes, and the market rises for one final rally, it the Fed continues on its current course, it will be EXTREMELY difficult for the market to sustain a longer term rally under these conditions.

Yesterday’s Sector Ratio finished with a reading of 14-10 positive. However, except for the Top 3 sectors, most had RS readings of 1 and zero. In other words, the positive List is not really all that strong. The Strongest Sectors were Semiconductors, Computers, Technology, Leisure and Service. The Weakest Sectors were Real Estate, Food Drug, Autos, Retail and Consumer Products.

If the Dow starts to move down towards 24,100, stocks in the weak sectors will likely get hammered. Avoid them. On the other hand, it the Dow does start to decline, keep your eye on a few stocks in the strong sectors. If I’m right and the Dow continues to form the triangle, it will be the stocks in these strong sectors that will lead the way up on the next rally leg higher.

Don’t be afraid of the the market as long as the Dow remains above 24,000. The triangle (if it’s a triangle) is a very positive pattern. However with a VTI reading of 45, the Dow is telling me that it’s NOT in the Trend Mode, so use short-scalping tactics to trade it.

That’s what I’m doing,

h

BTW, gold (GLD) and the gold mining ETF (GDX) generated a VTI-volume Buy Signal yesterday.

Market Signals for

03-22-2018

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

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The Hockey Stick Pattern
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