Professor’s Comments October 19, 2017
Posted by OMS at October 19th, 2017
The markets were mixed yesterday. The Dow finished up 160 points at 23,158 after trading as high as 23,173. The NASDAQ was flat, up 0.56 cents, with the SPX up only 2 points. Volume on the NYSE was moderate, coming in at 103 percent of its 10-day average. There were 164 new highs and 31 new lows.
The markets could have topped yesterday. We won’t know for sure until the indicators turn negative, but yesterday’s rally on the Dow appeared to be a ‘Blow Off Top’, sometimes seen at the end of a sky-rocket rally. Just about all of yesterday’s rally in the Dow was caused by one technology stock, IBM, which was up 12.99 points. This occurred on a day when the technology laden NASDAQ-100 (QQQ) was down 0.18 cents. If I just looked at SPX, I would have thought the Dow would have only been up about 17 points. Hmmm? Very strange!
It was also interesting to note that on a day when the Dow rallied hard, the other markets DID NOT, so The Tide stayed negative. All of the breadth indicators continued to fall. This tells me that yesterday’s rally in the Dow was weak.
There was another 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. If that move is down, it could start to turn a few more of the cockpit indicators negative. We’ll see.
At this point, the DMIs, both Coaches (Money Flow), and the Dean’s List are all still positive. The Money Flow indicator on the NASDAQ is very close to turning negative. My VTI-volume indicator on the Dow and NASDAQ is still positive. All these indicators will need to turn negative before a top can be confirmed. Remember, we want to be patient and get confirmation, because the overall pattern suggests this top will be the end of the Major Bull Market that started back in March 2009. If this is the case, we will have plenty of time, maybe 3-4 years, to trade the market to the downside.
Wednesday’s Sector Report was unchanged. The Sector Ratio remains at 17-7 positive. The Strong Sector List continues to be dominated by the Semis, PharmaBio, Cap Equipment, Material and Computers. The Weak Sectors are led by Household Products, Consumer Products, Media, Healthcare, and Telecoms. BTW, Intel (INTC), probably the most popular stock in the strong semiconductor sector, rose 0.45 cents yesterday making a new high. Semiconductors have been leading the market higher since The Tide turned positive on 31 August. Household Products, which have been one of the weaker sectors since 31 August, fell again yesterday. Pay attention to the Sector Report. Stay in stocks and ETFs in the Strong Sectors, avoid those in the Weak Sectors.
I still have not seen any big changes in Delta Trend Scores (DTS) from any of the sectors. Most Trend Scores in the Strong Sectors remain positive, except for the Service and Retail Sectors. These Trend Scores will need to turn negative before any significant decline can begin. If the markets start to move down today, look for a change in the Trend Scores and a change in the Sector Ratio. This will give us another indication that the markets have topped.
Gold (GLD) fell 0.46 cents yesterday to 121.67. My VTI-volume indicator turned negative, generating a Sell Signal for gold. As long as this indicator remains negative, the pattern suggests GLD could fall to the 105 or below.
That’s what I’m doing,
h
Market Signals for
10-19-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | NEG |
SUM IND | NEG |
VTI | POS |
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