Professor’s Comments April 19, 2018

Posted by OMS  at April 19th, 2018

The markets were mixed yesterday.  The Dow rose early, then fell into the close.  The large cap index finished the day down 39 points at 24,748.  It got as high as 24,833.  The technology laden NASDAQ was up 14 points while the SPX finished up 2.  Volume on the NYSE was moderate, coming in at 101 percent of its 10-day moving average.  There were 150 new highs and 55 new lows.

Sub-wave 1 of Wave ‘c’ up of Major Wave 2 up may have completed yesterday.  If this is the case, the markets should pull back slightly during the next day or so to rest before the next sub-wave up moves the Dow closer to the 25,500+ level.  My combination VTI-volume indicator remains positive along with a positive Tide and Sector Ratio.  As long as these indicators remain positive, I will continue to look to trade the long side, especially on pullbacks.

There was a small change in the A-D oscillator last night, so we need to be on the lookout for a Big Move during the next 1-2 days.

I had another Cigar Day yesterday.  Jim Cramer might have helped.  Apparently, he warned about Micron Technology (MU) recently, saying the stock was priced too cheaply (?).  He compared it with something he saw in Bethlehem Steel a few years back, when that stock also had a low P/E ratio a year before it started to tank.  Hmmm?  In other words, Jim is not trusting the earnings being reported. (Where have you heard this before?)  Anyhow I thought it was a ridiculous rant to compare Micron with Bethlehem Steel.  They are completely different animals. But I don’t want to explain why now. All I want to say is it appears that Jim’s comments caused a large European Bank to dump half its holdings of Micron.  So, the stock fell over 1.50 just after yesterday’s open.  I loved it!

BTW, Micron (MU) delivered another exceptional quarter of record revenue and profits on March 22 causing several analysts to boost their estimates for coming quarters.  I don’t pay attention to what analysts think either, but I did find a few of their comments interesting.  Also, for what it’s worth, Zack’s made MU its stock of the day yesterday. The stock went on a tear after the Zack’s announcement. 

But like I said, I don’t care what Cramer, European Banks, or Wall Street analysts say or think.  I pay attention to indicators, Lists, and patterns.  So yesterday, with Semiconductors leading the Strong Sector List and Micron high on the Member’s Watch List, I was looking for an opportunity to buy the stock.    The short-term bars gave the signal just before 10am and stayed positive until just before the close.  The trade was good for 2 ½ points.  Nice!

It was pretty much the same story with Intel (INTC), but not as dramatic.  Cramer didn’t talk about INTC, so the stock didn’t fall as much at the open. The Buy Signal on the 5s came at the 10.20am mark, with an exit near 2pm.  INTC was good for just under a point.  So combined, the two semiconductor trades produced about 3 ½ points.  Thanks Cramer.

While I was trading yesterday, I was thinking about something Ashley G. showed me during Monday night’s PT Class.  Ashley showed me how she used the information in my Class About Nothing to scalp Intel.  She had both trades exactly right.  I love it when I see my students using what they learn in Class to make money.  Puts a smile on my face :>)  I’ll bet Ashley was paying attention to MU and INTC yesterday.  Did you? 

Anyhow, figuring that sub-wave 1 up was nearing completion, I exited both trades and moved to the sidelines.  My kitchen cabinets are being installed and the counter top guys had to take a few measurements.  I just watched.

Today, with the possibility of a Big Move coming, I’ll be watching the short-term bars again.  What will I be watching?  Hmmm.

Well, the Sector Ratio weakened slightly after yesterday’s trading.  The Ratio now stands at 17-7 positive.  Also, the Semis fell out of the top 5 strong sectors, so I’m going to be careful there.  The Strong List was led by Energy, Material, Technology, Telecoms, and Computers, Consumer Products and Healthcare. The fact that the Ratio  remains positive is a positive sign if sub-wave 2 down is going to develop.  Remember, IF sub-wave 2 is starting, it is a corrective wave, so only smaller positions are allowed. If the market does pullback, I’ll probably use the opportunity to re-establish a few small positions in technology stocks.  I still believe that IF this market is to move higher, technology will lead the way

I’ll continue to avoid Real Estate, Autos, Banks, Food Drug, Finance, and Retail.  All are on the Weak Sector List.  IF I owned them (which I don’t), I’d use any rally to exit the positions, especially the REITS.  I believe the REITS will get hammered during the next market decline.

Yesterday I also said Energy was a candidate for Rifle Trades.  Energy continues to be the strongest sector on the Strong Sector List.  Yesterday I mentioned that CVX was one of the stocks I was watching because it was near the top of the Member’s Watch List along with several other energy stocks.  I also said it had a positive VTI-volume indicator and was in the Trend Mode.  I also mentioned Halliburton (HAL) and Nabors Energy (NBR).

So yesterday, what do you think happened with these energy stocks? Chevron and Halliburton were up 2.36 and 1.2, respectively.  Nabors Industries (NBR), a 7 dollar stock, was up 0.23 cents.  All made for great scalp trades.

Again, with a positive Tide and a positive VTI-volume indicator on the Dow, we use the Strong Sector List to help select strong stocks and ETFs from the Dean’s List and Member’s Watch List.  This is what we do in the Professor’s Methodology. 

One other thing:  Yesterday I mentioned that I ran The Professor algorithm recently and was NOT seeing the kind of positive action that I wanted to see from him.  Remember, so far, the highest number of stocks The Professor highlighted since the DMI on the NASDAQ turned positive has been 26.  Yesterday, he only highlighted 16.  So, without seeing 50 or more stocks being highlighted, I’m still concerned about the strength of the current rally. That’s why I’m still trading relatively small positions and taking profits quickly.  With No-Trend conditions in place for the major indexes, be extremely careful about holding large positions overnight.  This is still NOT the time to be aggressive. Also remember that we’re trading what appears to be the final wave of a zig-zag pattern for Wave 2 up in a Bear Market. So all of these trades are basically counter trend trades. Don’t get caught up in the short-term Bullish enthusiasm.

That’s what I’m doing.

h

Market Signals for

04-19-2018

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

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