Professor’s Comments May 28, 2020
Posted by OMS at May 28th, 2020
The markets rallied hard again yesterday continuing to push higher from the strength of two consecutive small change signals in the A-D Oscillator. The Dow finished with a gain of 533 points at 25,548, closing the gap from 6-9 March. Many times, gaps are targets that need to be ‘closed’ on a retracement move before the market reverses. We’ll see if this happens this time, but I wouldn’t count on it. I’d like to see the Sector Ratio begin to weaken before I start betting on any reversal. The NASDAQ and SPX gained 72 and 44 points, respectively. Volume on the NYSE was heavy, coming in at 117 percent of its 10-day moving average. There were 21 new highs and 7 new lows.
Yesterday’s strong impulsive rally appeared to be a continuation of wave 3 up within Wave C up of Major Wave B up. Now that the 29 April ‘target’ of 24,765 has been tested and broken and the 6-9 March gap has been filled, it’s possible that wave 3 up of Wave C up is nearing completion. It’s also possible that yesterday’s a-b-c move just after the open was wave 4 of the pattern (a stretch) and wave 5 up is now underway. If this is the case, wave 5 up should push the Dow toward the 25,865 level before Wave C up is complete.
The Market Timing Indicators for the Major Indexes remain Positive.
The Dean’s List and The Tide also remain Positive.
The Sector Ratio stayed at 24-0 Positive after yesterday’s session. The fact that all 24 sectors of the S&P are positive is another reason I must remain Bullish. The top 5 strongest Sectors were Material (includes gold) Leisure, Energy, Retail, and Healthcare.
Gold (GLD) rose 0.29 cents to 161.18 within its wave 2 pullback. The Gold Miners Index, the HUI, dropped 10 points early yesterday to 260, before closing at 271.06. My target for wave 2 on the HUI remains near the 240 level. If this pullback happens as I expect, I will view gold and the miners as an attractive buying opportunity. BTW, the wave 2 pattern would become invalid if the HUI rose above the 20 May high of 303 in the days ahead. What I’m telling you is that wave 2 pattern in the HUI is NOT very strong.
On the other hand, the pattern for Bonds is much clearer. Yesterday’s early rally appeared to be the completion of a small wave 2 in Bonds. If this analysis is correct, Bonds should begin a wave 3 of 3 decline soon.
There were NO CHANGES to the Model after yesterday’s session. The Model continues to hold 600 shares of TBT, and 40 shares of UCO, with a cash balance of $87,037.
That’s what I’m doing,
h
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.
Market Signals for
05-28-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 18 May 2020 |
NASDAQ | POS | 18 May 2020 |
GOLD | NEU | 26 May 2020 |
U.S. DOLLAR | NEU | 20 May 2020 |
BONDS | NEG | 11 May 2020 |
CRUDE OIL | NEU | 19 May 2020 |
Category: Professor's Comments