Professor’s Comments September 13, 2018
Posted by OMS at September 13th, 2018
The markets were mixed yesterday. The Dow was up 28 points at 25,999. The NASDAQ was down 18 points while the SPX was flat (up 1 point). Volume on the NYSE was heavy, coming in at 111 percent of its 10-day moving average. There were 96 new highs and 79 new lows. The bearish divergence between price and breadth continues. This negative divergence is the markets way of telling us that it is NOT healthy.
Yesterday I talked about how the Dow was approaching overbought conditions but probably had more upside before its move was completed. So yesterday, the Dow popped 174 points intraday before its 2-period RSI became EXTREMELY overbought causing the index to pullback and close only 28 points higher. The 2-period RSI finished with a reading of 77.2, so it’s still slightly overbought. BTW, yesterday’s Big Move in the Dow was likely due to Tuesday’s small change signal in the A-D oscillator.
The reason I talked about the RSI yesterday is because it set up a nice intraday short for students watching the 2-period RSI. Again, with the DOW NOT in the Trend Mode (35-period CCI <100), this is what usually happens. The 35-period CCI finished with a reading of 97.7, so the Dow is still not in the Trend Mode. In other words, if the Dow moves higher early today, it could set-up another nice scalp trade. Remember, The Tide is still negative,so I’m always looking for times to scalp an overbought market with a negative Tide.
The Market Timing Signals for the equities indexes did not change after yesterday’s session. The signal for the Dow remains positive. The same signal for the NASDAQ remains negative.
The Big News for the day was the change in signals for Gold and the Dollar. The Dollar had a bad day yesterday causing a strong rally in gold. The gold rally was helped by a lot of short covering. All this positive action caused the VTI-volume indicator on gold to turn positive. The same indicator on the Dollar turned negative. However even though I’m now on a positive signal for gold (the metal), the VTI-volume indicator for the gold miners is still neutral.
BTW, my ‘trial’ positions in gold and the miners produced a ‘Cigar Day‘ for me yesterday. Many of the stocks produced ‘Hammer’ candlesticks, something often seen at significant bottoms. It’s a start.
Remember, what we should be watching now is the small Hockey Stick Pattern that has formed on GLD. A few days ago, I mentioned that this ‘Blade’ of this pattern should provide a springboard for the ETF to test the 50-day moving average near 115.25. Yesterday GLD rose 0.95 cents to finish at 114.17. If GLD continues to rally, and moves past 115.25, it would constitute a ‘Rope Jump’. A ‘Rope Jump’ is something that MUST happen if GLD is going to turn around and start its Major Wave 3 up. For now, I’m just holding my ‘trial’ positions and waiting for the ‘Jump’. If this happens, I’ll look to add to these positions on pullbacks. Remember, a Rope Jump, if it happens, is only the start of a Major move up. There will be pullbacks as Wave 2 develops. So watch the 2-period RSI to highlight these oversold conditions.
The VTI-volume indicator on UCO, the ETF I use to track Crude Oil turned positive yesterday. However, the same indicator remains Neutral for the refining stocks I’m watching. I’m still watching the refiners from the sidelines.
The Sector Ratio remained unchanged at 14-8 positive after yesterday’s session. Transportation, PharmaBio, FoodDrugs, Household Products and Telecoms continue to lead the Strong Sector List. The Weak List was led by Energy, Semiconductors, Service, Healthcare, and Banks. The Materials Sector, which includes gold, has moved to the bottom of the Weak List. Another day or so of positive action could see it move to the Strong List. That would be another positive for gold and the miners.
That’s what I’m doing,
h
Market Signals for
09-13-2018
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 11 Sep 2018 |
NASDAQ | NEG | 07 Sep 2018 |
GOLD | POS | 12 Sep 2018 |
U.S. DOLLAR | NEG | 12 Sep 2018 |
BONDS | NEG | 05 Sep 2018 |
CRUDE OIL | POS | 12 Sep 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
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Category: Professor's Comments