Professor’s Comments August 28, 2018

Posted by OMS  at August 28th, 2018

The markets continued their rise yesterday with an impulsive rally typical of what you would expect in a Wave 3 up.  The Dow rose 259 points, closing at 26,050. The NASDAQ and SPX rallied for 72 and 22 points, respectively.  Volume on the NYSE was moderate, as it usually is going into late August (the summer doldrums) coming in at 90 percent of its 10-day moving average.  There were 93 new highs and 42 new lows.

There were no changes to any of The Professor’s VTI-volume indicator signals.  All major markets for which signals are posted in the cockpit remain on Buy Signals, except for the U.S. Dollar which remains on a Sell Signal.

Speaking of these signals, how do you like them so far?  Haven’t they been great?  Since generating its new re-Buy Signal, the Dow is up over 400 points.  Same for the NASDAQ which is up 68 and 72 points in the two days since generating its Buy Signal.  And for gold which is up nicely since generating its first Buy Signal in months.

But the signal I’m most interested in now is the Sell Signal generated for the U.S, Dollar on 21 August. This signal changes a lot of things, because sooooo many things revolve around the Dollar. 

A lower dollar is EXTREMELY positive for U.S. companies doing business overseas.  So yesterday, we saw Caterpillar (CAT) pop for 3.83 points in response to the lower Dollar.  Boeing too, which rose 4.36 points.  The Professor’s VTI-volume indicator on Crude Oil turned positive on 20 August, allowing energy stocks like Chevron Texaco (CVX), another Dow stock, to rise, which is how you get a 259 point day in the Dow.  BTW, DIG, the oil and gas ETF, has replaced DUG on the Dean’s List, so the environment is now favorable for energy.

Gold is also directly impacted by the falling Dollar, and now with UDN back on the Dean’s List replacing UUP, the environment is now favorable for gold.  However, having said this, I still don’t have a VTI-volume Buy Signal for most gold stocks and ETFs.  It’s close, but it’s still not there yet.

And finally, we see that Bonds are still on a Buy Signal, telling us that despite all the talk in Washington and on CNBC about rising interest rates, the market is saying that interest rates are not a problem.  IF the VTI-volume indicator on TMF turns negative, that’s when I’ll start worrying about rising interest rates.  Not now.

Anyhow, it appears that Wave 3 up is underway, so enjoy the ride, but watch the signals.  With the Dow now over the 26,000 level, Wave 3 up could be getting close to completion.  Remember, my target for Wave 3 up was the 26,000 level, so be careful.  I still believe the Dow will eventually top above the January high of 26,617, but probably not before Wave 3 tops and Wave 4 corrects a healthy portion of the Wave 3 rally.

The Sector Ratio increased to 19-5 positive after yesterday’s session.  FoodDrugs, Telecoms, Household Products still lead the Strong Sector List, but after yesterday lower Dollar, Cap Goods has moved into the Top 5.  The Banks, Semis, Financials, and Energy are close behind.  The Material Sector, which includes gold, still leads the Weak Sector List followed by Service, Autos, Computers and Healthcare.  I’d really like to see Materials Sector move to the Strong List in the next week or so.  If it does, it would open the door to a lot of gold and silver mining stocks that I have my eye on.  Again, if I’m right about gold starting its Major Wave 3 up rally, the Materials Sector MUST drop off the Weak List.  So, I’m being patient.

BTW, with the Semis now back on the Strong List, I’m starting to watch my favorite semiconductor stocks, like INTC, MU, and TER. The VTI-volume indicator on Teradyne (TER) is positive, but the same indicator on INTC and MU is negative.  So, while the semis are improving, most are still not on a VTI-volume indicator Buy.

That’s what I’m doing,

h 

Market Signals for

08-28-2018

Professors Major Market

Timing Signals for

08-28-2018

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