Professor’s Comments April 30, 2019
Posted by OMS at April 30th, 2019
The markets were up slightly yesterday on low volume and narrow breadth. The Dow finished 11 points higher at 26,550 after trading in a narrow range that is causing the Bollinger Bands to narrow. The NASDAQ and SPX were up 15 and 3 points, respectively. Volume on the NYSE was low, coming in at 92 percent of its 10-day moving average. There were 138 new highs and 16 new lows.
The Fed begins its 2-day meeting on interest rate policy today, so most traders will likely be on the sidelines today waiting for the Fed to make its announcement at 2pm tomorrow. This will likely cause the markets to trade in a narrow range today, further tightening the Bollinger Bands and setting up the possibility of a Band Squeeze Move after the announcement.
Today is also the last day of the month, so the market will likely have a positive bias as a result of Mutual Fund re-balancing. This positive end-of-month bias will not be there tomorrow when the Fed makes its announcement.
With decreasing and diverging breadth, the markets still appear to be developing some type of short term top. It’s still not clear whether this top will be wave 1 up of a five wave Ending Diagonal Pattern or the conclusion of the larger pattern. As I mentioned this weekend, there are several ways the large Ending Diagonal Patterns could end as Ending Diagonals are basically triangle patterns. As long as the market timing indicators remain positive, it’s likely that the markets will chop higher into mid-May. On the other hand, with weakening and diverging breadth indicators, the larger pattern could truncate at any time.
The Tide remains mixed with 3 of the 4 breadth indicators being negative. In other words, the market is rising while most of the breadth indicators are falling. The A-D oscillator has been negative for the past 8 trading days. A negative A-D oscillator means that most stocks are falling while the indexes continue to rise. This is not something what you want to see if you’re Bullish.
The Dean’s List remains positive.
The market timing indicators remain mixed. The Dow turned positive after yesterday’s session joining the NASDAQ and SPX on Buy Signals. The Russell 2K remains on a Neutral Signal.
The Sector Ratio increased to 19-5 positive after yesterday’s session. The Strong List was led by Real Estate, Household Products, Semiconductors, Leisure and Media. The Weak Sector List was led by Healthcare, PharmaBio, Telecoms, Energy and Service. There are still 9 sectors on the Strong List with RS ratings of 1 or zero. With low RS ratings, these 9 sectors can easily fall off the Strong List IF the market has one or two strong down days. In other words, one or two down days could easily change the current positive market conditions and make them negative.
Model Portfolio: There were NO Changes to the Model after Friday’s session. The Model continues to hold a ‘trial’ position (1,000 shares) of TZA, a 3X inverse leveraged ETF for the Russell 2K. The remainder of the theoretical $100,000 Model Portfolio remains in cash ($95,980).
The Model still does not hold a position in gold as it continues to wait for the timing indicators to turn positive. GLD moved back to a Sell Signal yesterday (from Neutral) after GLD dropped 0.54 cents to close at 120.83. My VTI-volume timing indicator for gold has not been positive since 28 March when GLD was trading at 122.01. With a low RS rating and a Sell Signal, I continue to exercise patience with gold while I wait for a signal change.
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.
That’s what I’m doing,
h
Market Signals for
04-30-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 26 Apr 2019 |
NASDAQ | POS | 13 Mar 2019 |
GOLD | NEG | 29 Apr 2019 |
U.S. DOLLAR | POS | 23 Apr 2019 |
BONDS | NEU | 26 Apr 2019 |
CRUDE OIL | NEU | 26 Apr 2019 |
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Category: Professor's Comments