Professor’s Comments September 25, 2018

Posted by OMS  at September 25th, 2018

The markets were mixed yesterday.  The Dow finished down 181 points at 26,562. In doing so, the Dow closed below its Upper Bollinger Band, generating a Bollinger Band Sell Signal. Yesterday’s decline also formed the third candle of an Evening Star Pattern, something often seen at market tops. 

The technology laden NASDAQ was down early but recovered to close 6 points higher.  During its early decline, the QQQ dropped to the 181.3 level, which was slightly below the first target support level depicted on the chart I posted last weekend.  The early decline and subsequent bounce increase the probability that sub-wave 3 down of Wave 1 down is underway.  A drop below the 180.5 level in the next few days would confirm the Bearish wave count.

The SPX closed 10 points higher.  Volume on the NYSE was moderate, coming in at 103 percent of its 10-day moving average.  There were 47 new highs and 112 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 volatile trading did not change any of my key market timing signals for the equity markets. The Dow remains positive and the NADSAQ remains negative. 

My market timing indicator for gold and the Dollar remains neutral, but negative for Bonds.  The indicator for Crude Oil remains positive. BTW, have you noticed how Energy Stocks, like CVX, VLO, HFC and MRO have responded since the VTI-volume indicator on Crude Oil turned positive? VLO rose from 109.51 to 114.95. HFC rose from 65.94 to 69.59. Producer-distributor CVX rose from 119.51 to 122.62.

Same for Bonds. Bonds generated a Sell Signal on 5 September. Since then TMF dropped from 18.59 to 17.22. That’s a Big Move for Bonds! It pay$ to watch the market timing signals.

The Sector Ratio increased to 19-5 after yesterday’s session.  However, the Relative Strengths of the Strong Sectors are still mostly 1s and 0s for all but the top sectors.  In other word, the Strong Sector List is not as strong as one would expect with a 19-5 ratio.  

The Strong Sector List continues to be dominated by the ‘defensive’ sectors like Household Products, Transportation, Telecoms, FoodDrugs, PharmaBio, and Cap Equipment.  The Materials Sector, which includes gold, continues to move up on the Strong List, with a RS rating of 1.  

The Weak Sector List was led by Semiconductors, Computers, Real Estate, Leisure, and Foods. 

Students should continue to hold stocks in the strongest sectors and avoid those in the weak sectors.

Gold (GLD) fell 0.02 cents to 113.47.  My VTI-volume indicator for gold remains on a neutral signal.  However, the same indicator for the gold miners is positive.

I’m still waiting for GLD to move above its 50-day moving average before I become aggressive with my gold purchases.  The past few days of relatively flat trading has cause the Bollinger Bands on GLD to narrow.  This usually means a big move is coming. But with a neutral signal, the big move could be up or down.  A move above the 50-day moving average would help confirm that a new change in direction is taking place.

That’s what I’m doing,

h

Market Signals for

09-25-2018

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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