Professor’s Comments May 31, 2019
Posted by OMS at May 31st, 2019
Last night, President Trump announced that the U.S. would impose a 5 percent tariff on Mexican goods starting on 10 June. The news is causing a steep decline in the overnight the overnight futures. It’s possible that the cash market could open below the 25,000 level. If 25,000 doesn’t hold, the Dow could fall to the 24,00 level or lower on this leg of the decline.
Yesterday’s small bounce from EXTREME oversold conditions was expected. So now that the bounce has occurred, even without the overnight news, the markets should begin to test the 25,000 level again. Again, if 25,000 doesn’t hold, the odds are high that the next Bear Market has arrived.
Yesterday, the Dow finished with a gain of 43 points, closing at 25,120. The move appeared to be a small retracement wave within wave ‘c’ down of Wave ‘B’ down. The NASDAQ and SPX finished up 20 and 6 points, respectively. Volume on the NYSE was moderate, coming in at 99 percent of its 10-day moving average. There were 60 new highs and120 new lows.
There were NO Changes to the market timing signals for equities. The Dow, SPX, NASDAQ, and Russell 2K remain on Sell Signals.
The VTI-volume indicator on the Dow and my custom Money Flow indicator for the index remains negative. This continues to be a Big Deal! A negative Money Flow indicator means that the Big Boys are no longer just moving money between sectors. Now they’re starting to take money out of the markets. This is occurring at a time when the yield curve is inverted, which is another sign a recession could be approaching.
The Tide and the Dean’s List remain negative. The DMIs remain Negative.
The Sector Ratio weakened to 19-5 negative after yesterday’s session. The Strong List continues to be led by Real Estate, Household Produces, Insurance, Telecoms and Financials. This is NOT the List you want to see if you’re Bullish on the markets. The Weak Sector List continues to be led by Service, Energy, Retail, Material, and Semiconductors. BTW, the RS ratings of the Sectors on the Weak List are a lot weaker (higher negative numbers) than the positive numbers on the Strong List. Not good!
Model Portfolio: Just after the market opened, the Model re-established the two inverse positions in DXD and QID, 500 shares each, it sold on Wednesday. The Model also bought and sold 1,000 shares of SCO, the inverse ETF for West Texas Crude Oil. The intraday scalp trade in SCO netted the Model a quick profit of $700.
So, going into today, the Model is holding 500 shares each of DXD and QID. The remainder of the Model is in cash ($80,254). If the 25,000 level is broken convincingly, the Model will begin to look for opportunities to add shares to its ‘trial’ inverse positions. Remember, the current pattern suggests that the Dow is still in a corrective Wave ’B’ down, so it can’t get too aggressive. A valid break of 25,000 would suggest the Dow is no longer in a Wave ‘B’ down and that something much larger is occurring.
Since inception, the Model has gained 12.94 percent, which translates into an annualized IRR of 59.62 percent. During the same period, a buy and hold strategy for the SPX has gained 1.45 percent. The Model continues to hold its own against the SPX even though the conditions the Model was designed to take advantage of (a trending Market) have not occurred to date.
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
05-31-2019
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 28 May 2019 |
NASDAQ | NEG | 20 May 2019 |
GOLD | NEU | 23 May 2019 |
U.S. DOLLAR | POS | 16 May 2019 |
BONDS | POS | 23 May 2019 |
CRUDE OIL | NEG | 23 May 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
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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