Weekend Strategy Review September 25, 2017
Posted by OMS at September 25th, 2017
The Dow fell 10 points on Friday, closing at 22,350. It was up 81 points for the week. The NASDAQ finished up 4 points on Friday and down 22 points for the week.
Not much changed on Friday. It still appears that the markets are in the process of completing the final waves of their topping patterns. The Dow appears to need a small pullback to about the 22,250 level to complete sub-wave 4 of minor wave 5 up. Once this wave completes, sub-wave 5 up should take the Dow back above 22,400+ to complete the pattern.
The NASDAQ may have already topped. The large cap technology stocks in the NASDAQ-100 appear to be in the initial stages of a Rounding Top Pattern. On Friday, I was watching the tracking ETF for the index (QQQ), and noticed how the declines for the past week were impulsive, while the corrections were gradual. This is typical behavior for the initial stages of a Rounding Top Pattern. I have attached a 15 minute chart of the Q’s so you can see what I mean. The reason this is important is because impulsive moves to the downside could mean that the trend is starting to shift to the downside. It’s still early, but we’ll need to keep an eye on it.
BTW, IF the NASDAQ-100 is starting to form a Rounding Top, we should see it rally during the early part of the week and then start falling later in the week to complete all five waves of the pattern. If this happens, it could be the completion of wave 1 down.
At this point, the NASDAQ is slightly ahead of the Dow in its pattern development. It could have already topped. And as long as the DMI and my VTI-volume indicator remain negative, I have to assume this is the case. If these indicators turn positive, it would likely lead to another leg higher. But right now, I’m on a Sell Signal for large cap technology stocks.
BTW, I’m now on a neutral signal for the rest of the market. The Dow has hit my target of 22,400+ and my volume indicators are starting to head down. I don’t see any point in establishing new long positions now, given that my targets have been reached.
There were no changes to Friday’s Sector Report. The Sector Ratio remained at 15-9 positive. The Strong Sector List continues to be led by the Semis, Energy, Material, PharmaBio, and Computers. The Weak Sectors are led by Consumer Products, Telecoms, Media, Household Goods, and Service.
Gold was mostly flat on Friday. GLD finished up 0.56 cents to 123.24. I’m still on a Sell Signal for GLD as my VTI-volume indicator remains negative. GLD has broken through its 50-day moving average and appears to be headed for the 200 near 120. GLD MUST hold the 120 level on this move down, otherwise the wave structure suggests it’s headed for 105 or below. If gold trades near its 50-day moving average this week without a strong rally, it will start to form an inverse Hockey Stick Pattern. This is the pattern that will likely take GLD to the 105 level or below.
Have a great weekend,
That’s what I’m doing,
h
Market Signals for
09-25-2017
DMI (DIA) | POS |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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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.
Category: Professor's Comments, Weekend Strategy Review