Professor’s Comments May 24, 2018
Posted by OMS at May 24th, 2018
The Dow fell over 160 points early, then rallied to close higher. The Dow finished up 52 points, closing at 25,013, The NASDAQ and SPX finished up 48 and 9 points, respectively. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day average. There were 36 new highs and 55 new lows.
Yesterday’s early decline and late rally were likely micro-waves ‘a’ down and ‘b’ up of sub-wave 2 down within Wave 3 up. If this is the case, the Dow could have one more micro-wave down before sub-wave 2 down completes. This does not have to be the case for the NASDAQ it is in a slightly different pattern.
Wednesday’s late rally turned the VTI-volume indicator on the NASDAQ back to a Buy Signal. So now my two key indicators for the Dow and NASDAQ are back on Buy Signals. Both indicators are also in the Up-Trend Mode (above 70).
There was another small change in the A-D oscillator last night, so we need to be on the lookout for a Big Move within the next 1-2 days. With President Trump calling for an investigation of the auto industry for ‘security reasons’, that Big Move could be down. After reading his comments, I believe they were made to put his administration in a better negotiating position for the upcomming NAFTA talks. I doubt if the administration will follow through with an investigation like this as it will likely lead to a trade war. But for the short-term, the President’s comments could be a negative for the markets.
Yesterday’s early decline gave me an opportunity to buy several stocks in the Healthcare, Semiconductor, and Computer Sectors. By the end of the day, Medtronic (MDT) and Mylan (MYL) were up 63 and 70 points, respectively. Intel (INTC) was up 1.21 from my entry point; Cisco Systems (CSCO) was up 0.68 cents from my entry point. All stocks were selected from the Member’s Watch List after using the Strong Sector List to help guide my selections. The result was another Cigar Day.
Here’s my strategy: As long as the VTI-volume indicator on the Dow and NASDAQ remain positive and in the Up-Trend Mode, I will continue to look for opportunities to buy stocks in the strongest sectors on any pullbacks. Also, with both markets now in the Up-Trend Mode, I am no longer trading these stocks. I will be holding the stocks I buy until the VTI comes out of the trend Mode.
Monday’s Sector Ratio decreased slightly to 14-8 positive. Energy, Healthcare, Cap Equipment, Consumer Products, Semiconductors and Financials were the Strongest Sectors. The Weakest Sectors were Real Estate, Household Products, Foods, Service, and Media. I continue to avoid stocks in these weak sectors.
Gold and Silver appear to be close to generating a Buy Signal. My combination VTI-volume indicator on GDX will likely turn positive if the ETF moves above 22.43 in the days ahead. The Materials Sector, which includes gold, continues to move up on the Strong Sector List. If I’m right and the metals are about to start their next major move up, look for the Materials Sector to move into the top 5 Sectors on the Strong List.
That’s what I’m doing,
h
I’ll be returning to Jacksonville early tomorrow, so my next report will be the WSR.
Market Signals for
05-24-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS-T |
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