Professor’s Comments October 1, 2019

Posted by OMS  at October 1st, 2019

The markets rose yesterday on light end of quarter volume. The Dow finished with a gain of 97 points, closing at 26,917.  The NASDAQ and SPX were up 60 and 15 points, respectively.  Volume on the NYSE was low, coming in at 88 percent of its 10-day moving average.  There were 110 new highs and 27 new lows.

The markets continue to trade in a narrow range making lower highs and lower lows.  At some point, the markets should begin to break beyond the trend lines connecting the highs and lows of this narrow channel and begin an extended move.  Right now, with negative signals on the cockpit, the odds favor the move will be to the downside. A break of 26,700 will signal that the next major move down is underway. This move should drop the Dow below the 15 August low of 25,340, so students should be paying attention to the 26,700 level.

There were no changes to the market timing indicators after yesterday’s session.  The timing indicators on the Dow, NASDAQ, SPX, and Russell 2K remain Negative.

The Daily DMIs on the Dow, NASDAQ, SPY, and Russell 2K remain Negative. The Weekly DMI on the Dow remains Negative.

The Dean’s List remains positive while The Tide is neutral.

The market remains in a very fragile condition. Yesterday was the last day of the month/quarter, so the positive bias caused by Mutual Fund ‘Window Dressing’ is now behind us.  With mostly negative indicators on the cockpit, the odds now favor a market decline in the days ahead.  

There was a major change to the Sector Ratio after yesterday’s session.  The Ratio weakened from a Neutral 12-12 Neutral on Friday to a 7-17 Negative reading on Monday.  This major change occurred on a day when the Dow was up over 100 points for most of yesterday’s session. The Strongest Sectors were Service, Food Drug, Consumer Products, Insurance, and Telecoms. All these sectors are defensive in nature.  So, it appears that yesterday’s move was caused by the Mutual Funds and institutions rotating out of the aggressive sectors and into more defensive issues. The Weak Sector List was led by Energy, Leisure, Media, Transportation, and Material.

Gold (GLD) got hit hard again yesterday dropping 2.19 to 138.87 as wave ‘c’ down continues.  I’ve been waiting for GLD to get closer to the 137-138 level before I get interested.  Yesterday’s decline was strong, so GLD could be forming a five wave pattern that could take it well below the 137 level.  I am avoiding gold for now until I see evidence that the decline has completed. 

Bonds moved sideways on Monday, continuing to develop the Blade of a negative Hockey Stick Pattern.  The pattern projects a decline to the 22-23 level.  The market timing signal for Bonds remains Neutral.  All I’m doing now is waiting for a signal change before adding a few shares of TBT, the inverse ETF for Bonds, to the Model.  Right now, with Bonds forming a negative HS Pattern, they could be the best trade on the Board. The negative pattern suggests that interest rates are about to move significantly higher.  I’m watching the shorter-term bars on TBT.

There were no changes to the Model after Monday’s session. The Model continues to hold 1,000 shares of DXD, 700 shares of QID, and 600 shares of SQQQ. The Model is currently up 26.9 percent after yesterday’s session with $60,875 in available cash.

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

10-01-2019

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
FAQ

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.