Professor’s Comments October 12, 2018
Posted by OMS at October 12th, 2018
Even though the Dow closed down another 546 points, bond yields fell. This was completely different from what occurred on Wednesday when Bond yields rose while the equity markets fell. It tells me that wave 3 down is getting close to a bottom.
I wouldn’t get too excited about trading a bottom here, mostly because any rally from current levels will likely be followed by more selling as the wave 3 bottom is re-tested.
Another reason I’m getting confident a bottom is close at hand is because of the A-D oscillator came in with an EXTREME oversold reading of -294.3. Readings less than -250 usually result in a short-term bounce. The bounce, IF it occurs, will likely be wave 4 of Wave 1 down….at least on the Q’s. The Dow is in a slightly different wave count, with the current decline resulting from a DMI change off a THT Pattern.
Anyhow, the more defined pattern is the one on the NASDAQ-100 or QQQ so let’s use it for this analysis. Because the markets dropped so hard during the past two days, I must view the decline as an impulsive wave 3. The fact that the Q’s fell impulsively AFTER a wave 1 decline and an a-b-c wave 2 retracement also argues for a wave 3. So, once the current wave 3 decline completes, the Q’s (and the other markets) should bounce to retrace a portion of the current decline. Because wave 2 on the Q’s took about a month to develop, the Principle of Alternation suggests that wave 4 should take about 2 weeks or less. After that, the market should resume its re-test of the recent low.
At this point, because the Dow and Qs appear to be in different wave counts, I want to see how the markets bounce before making any further projections. However, for now, I’ll still go with 24,000 on the Dow and 6,400 on the NASDAQ as my Major Wave 1 pattern targets. Students should realize that because the wave counts for the Dow and NASDAQ are different, they most likely will arrive at these targets in different time frames.
My VTI-volume indicator on gold turned positive, generating a Buy Signal. The same indicator for mining stocks was already positive, so now the basic metal AND the miners are on Buy Signals. NUGT broke above the 14.41 level and closed at 15.52, up 2.64 points. It was a wonderful day to be holding gold and the miners. However, remember what I said yesterday about the Dollar. It’s still on a Buy Signal…and that bothers me when it comes to gold. I won’t feel comfortable about gold until I see the Dollar showing RED on the cockpit.
The Sector Ratio slipped to 1-23 negative after today’s session. The only positive sector was the Utilities. With only one sector being positive, I can’t even think about going long at this point.
These are extremely unusual times. The indicators, Lists, and Ratios are at EXTREME levels, and because of this, the market should bounce. However, the markets are also in EXTREME downtrends, a place where overbought/oversold indicators like the 2-period RSI are NOT the best indicators. Oversold markets can continue to decline, and EXTREMELY oversold indicators can remain EXTREMELY oversold.
Because of this, I want to see the markets bounce and then re-test of the recent lows before doing anything on the long side. It’s much to dangerous to do anything else.
That’s why I’m spending quality time with my granddaughter.
That’s what I’m doing,
h
Market Signals for
10-12-2018
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 10 Oct 2018 |
NASDAQ | NEG-T | 05 Oct 2018 |
GOLD | POS | 11 Oct 2018 |
U.S. DOLLAR | POS | 03 Oct 2018 |
BONDS | NEG | 05 Sep 2018 |
CRUDE OIL | NEU | 10 Oct 2018 |
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.

Category: Professor's Comments