Professor’s Comments October 17, 2019
Posted by OMS at October 17th, 2019
The markets fell slightly yesterday on moderate volume. The Dow finished with a loss of 23 points at 27,002. The NASDAQ and SPX were down 25 and 6 points, respectively. Volume on the NYSE was 102 percent of its 10-day moving average. There were 112 new highs and 35 new lows.
There were NO CHANGES to the market timing indicators after yesterday’s session. The Dow, NASDAQ, SPX, and RUT remain on Buy Signals.
The DMI on the Dow and NASDAQ remains positive. The Dean’s List and The Tide remain Positive.
The patterns remain weak, so the odds for higher prices are still only about 60-40. If the September high of 27,307 is exceeded, the odds for a move to 27,500 or more will increase significantly, but probably NOT change where the final top occurs. It still appears that the Dow will top near the 27,500-27,700 level.
There was a small change in the A-D oscillator last night, so we need to be on the lookout for a Big Move within the next 1-2 days. With mostly positive indicators on the cockpit, and a small change signal on the Board, the odds favor a continuation of the recent rally before a major top is in. That top could occur within the next few weeks.
However once again, yesterday’s trading action formed another Shooting Star candlestick pattern on most of the major indexes. These types of candles are usually found at the end of a major rally, not at the beginning. Also, the ‘Star’ was formed inside the body of the previous day’s candle, which makes it an ‘Inside Day’. So even though the indicators are mostly positive after yesterday’s session, the ‘Shooting Star’ and ‘Inside Day’ are suggesting a turn could be approaching.
The Sector Ratio fell slightly to 15-9 Positive after Wednesday’s session. The fact that the Ratio remains almost 2:1 positive continues to support higher prices. The Strongest Sectors were Service, Retail, Consumer Products, Semiconductors and Food Drugs. The Weak Sector List was led by Energy, Household Products, Leisure, Utilities, and Media.
Gold (GLD) rose 0.80 cents to 140.40. The rise did not change the signal on gold. It remains on a Sell Signal. It’s still not clear if gold is completing wave 4 down within Wave 3 up or finishing wave ‘a’ up within a larger a-b-c pattern for Wave 4. The next few trading days should help clarify the technical picture. Until then, I’ll remain on the sidelines. The most likely scenario for gold is that the metal won’t begin to rally until equities top.
The Model bought a ‘trial’ position (1,000 shares) of UCO, the ETF for Crude Oil during yesterday’s session. Price paid for the shares was 15.56. The Model also owns 1,000 shares of TBT, the inverse ETF for Bonds and has $85,085 in available cash. After yesterday’s session, the Model is up 26.2 percent.
The indicators on Crude Oil are showing signs of positive divergence on the shorter-term bars. Given that crude has formed five distinct waves of a triangle pattern since last April, the next move (up) could be ready to begin. The reason I’m interested in Crude (UCO) now is because of the large ‘Stick’ that formed from its December 2018 low of 12.5 to its 24 April high of 26.2. That’s 13.7 points. IF those 13.7 points are added to the recent low of the triangle (14.28), it puts the target just under the 28 level. Remember, triangles are continuation patterns. Prices usually leave a triangle in the same direction they entered the pattern. In this case the direction is up. If the daily indicators turn positive, the Model will add to its ‘trial’ position in UCO.
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
10-17-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 11 Oct 2019 |
NASDAQ | POS | 11 Oct 2019 |
GOLD | NEG | 11 Oct 2019 |
U.S. DOLLAR | NEG | 11 Oct 2019 |
BONDS | NEG | 11 Oct 2019 |
CRUDE OIL | NEG | 15 Oct 2019 |
Category: Professor's Comments