Weekend Strategy Review November 25, 2018
Posted by OMS at November 25th, 2018
The markets were down Friday on light post-Thanksgiving holiday volume. The Dow lost another 179 points, closing at 24,286. It was down 1,127 points for the week. The Nasdaq lost 33 points on Friday and was down 309 points for the week.
Since Wave 2 up completed on 8 November, the Dow has lost slightly over 2,000 points as Wave 3 down continues to unfold. Last week’s impulsive decline appeared to be part of sub-wave 3 of Wave 3 down. Once it completes, there should be a small sub-wave 4 retracement followed by a sub-wave 5 decline. Then after all five sub-waves of wave 3 down are complete, the Dow should be trading near or below the 23,500 level. It could be significantly lower.
That’s because Friday’s decline tested and was stopped by a Weekly trendline drawn from the February low. If this trendline is broken next week, there is NO support for the Dow until it reaches the 200-day moving average on the Weekly Chart. So, it’s possible the Dow could fall to its Weekly moving average which is currently located near the 21,500 level. In other words, IF Wave 3 down stops somewhere between 23,000 and 23,500 level, its starting to look like 21,000 will be a potential target for Wave 5 down.
There was a small change in the A-D oscillator on Friday, so we need to be on the lookout for Big Move within the next 1-2 days.
The Sector Ratio was 1-23 negative after Friday’s session. The only positive sector was Household Products. Not even the Utilities made the Strong List…and this is the time when I’m usually looking to buy Con Edison (ED), my Christmas trade. Hmmm? BTW, the VTI-volume indicator on ED is currently neutral, so it’s possible that ED just might rally IF, and it’s a BIG IF at this point, we get a Wave 4 Christmas rally. I wouldn’t count on it at this point. With Wave 3 down currently underway, I don’t want to fight it. But if the Dow get closer to the 23,500, I’ll consider taking a shot.
Crude Oil got hammered again on Friday dropping to its lowest level since late 2017. UCO, the ETF I use to trade crude oil, gapped lower on Friday, closing down 2.28 points at 17.27. My market timing indicator for Crude Oil has been on a Sell Signal since early October. The last Sell Signal was issued on 23 October when UCO was trading at 29.52. Pay attention to those timing signals. They’re pretty good!
Gold remains on a Neutral Signal. GLD is still trapped between its 50 and 200-day moving averages. IF its going to move higher, it will need to break and trade above its 200-day moving average currently located at 117.87. If it doesn’t and starts to break below its 50 currently neat 115, it’s likely Major Wave 2 down is NOT complete and still needs to develop the final wave of its zig-zag pattern. I’m not interested in gold until I see a Green light on the cockpit.
Have a great weekend.
That’s what I’m doing,
Market Signals for
|A/D OSC||SM CHG|
|DOW||NEG||19 Nov 2018|
|NASDAQ||NEG||09 Nov 2018|
|GOLD||NEU||15 Nov 2018|
|U.S. DOLLAR||NEU||14 Nov 2018|
|BONDS||POS||19 Nov 2018|
|CRUDE OIL||NEG||23 Oct 2018|
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