Professor’s Comments September 18, 2018
Posted by OMS at September 18th, 2018
The markets fell hard yesterday with tech stocks on the NASDAQ getting hit the hardest. The Dow was down 93 points at 26,062. The NASDAQ and SPX were down 114 and 16 points, respectively. Volume on the NYSE was moderate, coming in at 94 percent of its 10-day moving average. There were 80 new highs and 97 new lows. The bearish divergence between price and breadth continues. This negative divergence is usually one of the more reliable tells that a top of major significance is approaching.
Yesterday’s decline did not change my VTI-volume indicator on the Dow. It remains positive. The same indicator on the NASDAQ remains neutral. The indicator for gold and the Dollar is also neutral, but negative for Bonds and Crude Oil.
The Dow still appears to be tracing out the final sub-waves of Major Wave 5 up is underway. My target for final wave ‘e’ up remains near the 26,600 level. However, with the negative divergences I’m seeing in breadth, the odds for a final push to 26,600+ are starting to lessen. Pay attention to the indicators on the equity indexes now. If they turn negative, manage your money. Again, the Ending Diagonal Pattern on the Dow suggests that once Major Wave 5 up completes, the next move for the Dow should be down to the 24,000 level. That’s why I’m watching the indicators very closely now.
Yesterday I received an email from Linda B. asking about the Hindenburg Omen. Talk about the ‘Omen’ usually pops up anytime a market starts to approach a top. Because of this, I thought I’d share my response to Linda with you. Here’s what I said to Linda:
“There’s been a lot of stuff on the internet lately about Hindenburg Omens. I’m not a big fan of these things, mostly because I don’t think they’re as reliable as the people that tout them make them out to be. However, I do believe they’re very useful to the doom and gloomers for selling subscriptions.
Like many things in the market, strategies based on Omens work just enough to keep them alive. I think (don’t know for sure) that most major declines were proceeded by Omens. But just because you have an Omen doesn’t necessarily mean that the market will decline. It’s sort of like the A-D oscillator or Summation Indicator or Up-Down Oscillator in that way. In every major decline, all of these indicators were negative. But just because the A-D Oscillator or Summation Indicator goes negative, it doesn’t mean the markets will crash or even decline.
The Hindenburg Omen is tied to the A-D oscillator, which is one of my major indicators. You need a negative A-D Oscillator to generate an Omen. And the A-D oscillator has been negative for the past 9 sessions, a very unusual event especially when the Dow is pushing toward a target high. I don’t know about Omens, but I do know that seeing a negative A-D oscillator on a rising market is NEVER a good thing. This is the negative divergence I continue to talk about in my comments. It’s also why I’m very concerned about this market.”
The Sector Ratio weakened to 12-12 neutral after yesterday’s session. So now, only 50 percent of the sectors are positive. The Strong Sector List was led by Household Products, Telecoms, PharmaBio, Transportation, and FoodDrugs, all ‘defensive’ sectors. Students should note that the ‘aggressive’ technology sectors have not been at the top of the Strong List for weeks.
The Weak Sector List was led by Semiconductors, Energy, Banks, Media, and Computers. All these Sectors were hit hard yesterday.
Students should continue to hold stocks in the strongest sectors and avoid those in the weak sectors.
Gold (GLD) rose 0.59 cents to 113.61 as the Dollar fell. I’m still watching for GLD to move above the 115.18 level, which would constitute a ‘Rope Jump’. If the ‘Jump’ happens it would be a very positive sign for gold.
BTW, the ETF for the Dollar, UUP, has developed a small negative Hockey Stick Pattern. If it breaks below the 13 September low of 25.04, its VTI-volume will likely turn negative and the ETF could enter the Down Trend Mode. This would be a real positive for gold. It might also give stocks in the Cap Equipment Sector a short-term pop.
That’s what I’m doing,
h
Market Signals for
09-18-2018
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 11 Sep 2018 |
NASDAQ | NEU | 13 Sep 2018 |
GOLD | NEU | 14 Sep 2018 |
U.S. DOLLAR | NEU | 14 Sep 2018 |
BONDS | NEG-T | 05 Sep 2018 |
CRUDE OIL | NEG | 17 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
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