Weekend Strategy Review September 15, 2019

Posted by OMS  at September 15th, 2019

The markets were mixed on Friday with the Dow buoyed by positive comments from the Administration on trade with China. It appears the President will hold off imposing new tariffs because China has started to import soy beans and pork again. It’s not like China wanted to do this…it had to! The Chinese people balked when their government told them not to eat pork. That it was bad for them. Hmmm? The Chinese have been eating pork for thousands of years. Now its bad for them? The people didn’t buy the government’s story. And when the people don’t buy the story of a Communist regime, that could be problematic for them down the road. Anyhow, the news was a short-term positive and kept the markets propped up. We’ll see what happens next week.

The Dow finished with a gain of 45 points, closing at 26,797.  It was up 422 points for the week. The NASDAQ and SPX were both down slightly on Friday.

Friday was the 8^th straight day the Dow closed higher, however it has done so on decreasing breadth and volume. The low volume is a sign of uncertainty and suggests the markets could see some choppy trading in the days ahead.

BTW, during the week, the TRIN (traders index) reached a high of 0.79. The last time the TRIN was this high was last September, just before the Dow fell over 2,800 points. It’s just another reason why I’m being cautious.

There were no changes to the indicators after Friday’s session. All the major indexes remain on Buy Signals.

The Tide and Dean’s List are Positive.

It still appears that the markets are in the process of topping, and will either begin moving lower within the next 1-2 days under the Wave 2 scenario or could chop higher to the 27,600-27,800 level under the Wave D scenario if 27,399 is exceeded. The odds still favor the Wave 2 scenario. Students should understand that once either scenario completes, the Dow should begin to decline to the 24,000 level or lower. All I’m doing now is waiting for the market timing signals to change.

The Sector Ratio remained at 22-2 Positive after Friday’s session. The Strong Sector List was led by Service, Semiconductors, Consumer Products, Food Drugs, and Insurance. The two Weak Sectors were Real Estate and Leisure.

Gold (GLD) dropped 1.17 on Friday closing at 140.15. I’m avoiding gold for now as Wave 4 down continues to play out. Once this pullback completes, gold (the metal) should rally to the 1,600 to 1,650 level as Wave 5 of Major Wave 3 up unfolds.  The Model continues to wait for a signal change before buying gold again.

Bonds got hammered again on Friday with TMF dropping another 0,59 cents to 28.69. TMF was down a whooping 6 points for the week. It’s important to understand what’s going on with Bonds now, as governments around the world continue to lower interest rates so they can decrease the cost of servicing their debt which is now out of control. This decline in interest rates, which in reality is a currency war, will eventually lead to higher prices for goods and services. It could even lead to hyper inflation in several global economies. The biggest danger I see with negative interest rates, which is now approaching $16 trillion of world debt assets, is the impact they will have on our seniors. The negative interest rates are driving people into risky equities so they can have money to live on. It’s a very dangerous situation, especially for retired seniors, who could not only see their next egg dissolve at the same time their income (dividends) are being reduced. As I’ve mentioned before, once a trend in Bonds starts, it tends to be a long term trend. So, all I’m doing now is waiting for a bounce before adding a few shares of TBT, the inverse ETF for Bonds, to the Model.

There were no changes to the Model after Friday’s session. The Model remains 100 percent invested in cash ($125,927).

The Model Portfolio is being shown for educational purposed only.  The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio.  Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.

Have a great weekend.

That’s what I’m doing,

h

Market Signals for

09-16-2019

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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.