Professor’s Comments March 9, 2018
Posted by OMS at March 9th, 2018
The markets closed higher yesterday after several large up-down-up moves that one usually associates with the legs of a developing triangle. The Dow finished 94 points higher at 24,895. The NASDAQ and SPX were also up 131 and 12 points, respectively. Volume on the NYSE was low, coming in at 85 percent of its 10-day average. There were 103 new highs and 40 new lows.
Yesterday’s early 149-point rally and 170 point intraday decline were the Big Moves predicted by Tuesday’s small change in the A-D oscillator. The A-D oscillator finished with another small change signal yesterday, so we need to be on the lookout for a Big Move within the next 1-2 days.
Yesterday’s trading action still didn’t tell us much about which Scenario is occurring. However, my VTI-volume indicator turned positive again, so for the very short-term, I now must favor the upside.
This means that IF the Dow starts to rally today, it’s likely the Dow will move higher, toward the 25,300+ level to complete wave ‘b’ up of Wave ‘C’ down.
BTW, yesterday’s VTI reading on the DOW was only 40.3, which means that the Dow is still has a negative bias and is still NOT in the Trend Mode. So, with a 2-period RSI reading of 67.6, it’s just as likely that the Dow could decline from these slightly over bought conditions.
With NO Trend in place, the conditions still favor scalp traders. On the other hand, IF you’re trading Computer and Chip stocks like Intel (INTC), the conditions are slightly different. INTC and most semiconductor stocks are now in the Trend Mode. With these stocks, Rifle Trading conditions now apply. In other words, this is where I’ll be using the 2-period RSI to add shares to a basic position.
Yesterday, INTC dropped 0.58 cents to 50.74. However, the 2-period RSI finished with a neutral reading of 53.4. If INTC pulls back today, and the RSI approaches or falls below 30, I’ll be looking to add shares. Same for other stocks in the computer and semiconductor sectors. BTW, even though the VTI on the Dow is NOT in the Trend Mode, the VTI on the NASDAQ-100 (QQQ), which contains a lot of technology stocks, is very close to trending. Yesterday’s reading was 69.3.
Another stock I find interesting at current levels is Canadian National (CNI). As you know from Class, CNI is my favorite railroad. But with the Transportation Sector being on the Weak List for months, I’ve been avoiding the stock. CNI has been pressured by President Trumps threat of import tariffs on steel and aluminum. CNI moves a lot of these metals south. But yesterday’s announcement appeared to leave some wiggle room for Canada and Mexico to be excluded from the tariffs, tying them to a new NAFTA trade deal. So, the railroad could could benefit.
Right now, the VTI-volume indicator on CNI is negative AND it’s in the Down Trend Mode. So, I’m not interested in buying a ticket to ride…yet. But IF the indicator turns positive, that’s another story. I’d also love to see the Transportation Sector move back to the Strong List. Just watching for now. Even though I love the railroads, I can’t buy them when they’re on the Weak List. Maybe as a scalp?
Last night’s Sector Ratio finished with a score of 14-10 positive. Semiconductors, Healthcare, Computers, Technology, and Banks were the leading sectors. The weak sectors were Autos, Food Drug, Transportation, Media, and Real Estate.
Continue to trade stocks and ETFs in the Strong Sectors and avoid the weak ones.
Gold fell slightly yesterday. The VTI-volume indicator on GLD has turned negative for the short term. However, it is NOT in the Trend Mode. So, with the VTI showing a reading of 45.4 and a 2-period RSI of 33.6, gold could be approaching a short-term bottom. Continue to watch gold. Remember, IF I’m right about the wave count, Major Wave 2 down could be nearing completion, with impulsive Wave 3 up about to start.
Watching and scalping. Remember, we’re still NOT in the Trend Mode, so be careful.
That’s what I’m doing.
h
Market Signals for
03-09-2018
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS |
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