Professor’s Comments November 21, 2017
Posted by OMS at November 21st, 2017
The markets rose yesterday. The Dow was up a lot more than the other markets, closing up 72 points, closing at 23,430. The NASDAQ and SPX were up 8 and 3 points, respectively. Volume on the NYSE was low, coming in at 85 percent of its 10-day average. There were 161 new highs and 37 new lows.
Not much changed with respect to the overall patterns. The Dow, SPX, and NASDAQ are all finishing large degree Ending Diagonal Patterns. The last four days of down, up, down, up trading action appear to be the final waves of a small triangle or wedge that should complete in early December. The SPX should complete near 2,600-2,610. My current target for the Dow is near 23,600-23,650.
Yesterday’s major indicator change was the A-D oscillator on the NYSE, which turned positive. This makes the Tide neutral. The fact that the A-D oscillator is positive means that most stocks on the NYSE are now moving up. This is what I would expect if the SPX was going develop a final rally to finish above 2,600.
Monday’s Sector Ratio rose slightly. The ratio now stands at 15-9 positive. As long as this ratio stays positive, the markets should maintain a positive bid.
The Strong Sectors were led by the Semis, Leisure, Real Estate, Cap Equipment, and Banks. The Weak Sectors were led by Healthcare, PharmaBio, Service, Telecoms, and Food. Continue to stay in stocks and ETFs in the strong sectors and avoid or short those in the weak sectors. Continue to watch for changes in the Sector Ratio. With the Sector Ratio maintaining its positive bias, the markets will likely continue to form their topping patterns into early December. But once we get past the Thanksgiving Holiday, please pay attention to any negative change in the ratio.
Also continue to watch the European markets as we move forward, especially Germany. The weekend’s elections have put Germany in a political crisis. In my WSR last weekend, I talked about how all of the European markets I follow are forming Head & Shoulders topping patterns. If EWG, the ETF for Germany, breaks below its 50-day moving average, now at 32.49, it will spell trouble for most of Europe. And if Europe starts to move lower, it will take a lot of the international markets with it. My VTI-volume indicator is still neutral for EWG, but a break below 32.49 will turn the indicator negative.
If you do trade the final waves of the current rally, please understand that the markets do not have to trade to the levels I mentioned above. They can truncate, and Germany could be the cause of it.
Protect yourself.
That’s what I’m doing,
h
Market Signals for
11-21-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
VTI | POS |
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