Professor’s Comments August 29, 2019
Posted by OMS at August 29th, 2019
The markets rose early yesterday, then traded sideways for the remainder of the day. The Dow finished with a gain of 258 points, closing at 26,036. The NASDAQ and SPX were up 30 and 19 points, respectively. Volume on the NYSE was moderate, coming in at 95 percent of its 10-day moving average. There were 115 new highs and 163 new lows.
Yesterday’s rally appeared to be a corrective wave within Wave 2 up. The corrective wave could have a bit more upside to go before prices begin to fall again, mostly because the days before the Labor Day Holiday usually have a very positive bias. On the other hand, because the overall pattern is extremely negative, there is nothing that says that prices can’t begin to fall immediately, with 25,340 on the Dow being a likely short-term target. I still believe that short positions on index ETFs established above yesterday’s close will have a successful outcome.
The market is in a very fragile condition now and students should be prepared for the possibility of a severe decline in the equity markets anytime between now or immediately after the Labor Day Holiday.
The pattern suggests that once the current corrective wave completes, the next set of waves should drop the Dow down to the 26 December 2018 low near 21,700. Once the decline starts, the pattern suggests it will gain momentum quickly.
However as I mentioned yesterday, before the decline begins, it’s still possible that the Dow could rally back to the 26,400 level if last Friday’s low was Wave ‘b’ of corrective Wave 2 up. The rally we’ve seen during the past few days has been corrective, rather than impulsive, so the Dow does not have to reach the 26,400 level before Wave 3 down begins. The current retracement rally can terminate at any time.
There were NO CHANGES to the market timing signals. The Dow, NASDAQ, SPX and Russell 2K remain on Sell Signals.
The Tide, and Dean’s List remain Negative. The Money Flow indicators on the Dow and NASDAQ remain Negative.
Gold pulled back slightly yesterday with GLD dropping 0.41 cents to 145.16. The Money Flow indicators on GLD continue to rise with price, which supports even higher prices. My target for GLD on this leg up remains near the 147 level, so IF GLD reaches that level, the Model will begin to manage its gold shares.
The trannies (IYT) fell to a low of 174.26 during yesterday’s session before bouncing to close at 178.57. The CCI on IYT remains in the down trend mode, so I would expect that once Wave 2 up in equities completes, the trannies will begin to lead the market lower.
The Sector Ratio strengthened to 7-17 Negative after yesterday’s session. The Strong Sector List was led by Household Products, Semiconductors, FoodDrugs, Telecoms, and Computers. The Weak Sector List was led by Energy, Autos, Real Estate, Banks, and Retail.
Model Portfolio: There were NO CHANGES to the Model after yesterday’s session. The Model continues to hold 1,200 shares of DXD and 650 shares of UGL, a 2X leveraged ETF for gold.
After yesterday’s session, the Model is up 29.2 percent, which translates to an annualized gain of 66 percent. The Model continues to hold a lot of cash ($62,872) waiting for high probability opportunities to put its cash to work. With the patterns suggesting a decline in the Dow to near the 21,700 level, the Model will be looking to buy additional shares of inverse index ETFs during the next day or so to take advantage of that potential decline.
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
08-29-2019
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 23 Aug 2019 |
NASDAQ | NEG | 30 Jul 2019 |
GOLD | POS | 23 Aug 2019 |
U.S. DOLLAR | NEU | 16 Aug 2019 |
BONDS | POS | 23 Aug 2019 |
CRUDE OIL | NEG | 22 Aug 2019 |
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Category: Professor's Comments