Professor’s Comments February 13, 2019

Posted by OMS  at February 13th, 2019

The markets were sharply higher yesterday. The Dow finished with a gain of 373 points, closing at 25,426.  The NASDAQ and SPX were up 107 and 35 points, respectively.  Volume on the NYSE was moderate, coming in at 102 percent of its 10-day moving average. There were 94 new highs and 8 new lows.

From a pattern perspective, yesterday’s rally appeared to be the ‘c’ wave of the a-b-c move for wave 2 up.  If I’m right about the pattern, wave 2 up should be close to completing and Wave 3 down should be next. The markets are once again at critical moving average resistance levels. They need to start moving down soon IF the wave 2 scenario I playing out. Otherwise, if they start breaking above resistance, there is a possibility that a new pattern is forming and the Bull Market is not dead.  It’s still way to early to say if this is happening, but as long as the market timing indicators on the cockpit remain positive, the possibility of higher prices exists.

There were NO CHANGES to the market timing signals on the cockpit for equities after yesterday’s trading.  The NASDAQ, SPX, and RUT remain on Buy Signals.  The volume portion of my VTI-volume indicator on the Dow remains on a sell signal making the overall signal Neutral.

The Tide and Dean’s List also remain positive.

I continue to see negative divergence in the Split Volume Moving Average (SVMA) and On-Balance Volume (OBV) indicators. The negative divergences on these indicators suggest a top is nearing as the current rally is not being supported by increasing volume.

The Sector Ratio rose slightly after yesterday’s session. The Ratio is now 15-9 positive.  Students should continue to watch for changes to the Strong and Weak Lists.  Once wave 2 up completes, the Sector Ratio and the Lists should begin to reflect the new change in direction.

The Strong List was led by Household Products, Semiconductors, Technology, Computers, and Retail.  The Weakest Sectors were Energy, Autos, Food Drug, Leisure, and Telecoms.

Gold (GLD rose mildly yesterday, gaining 0.26 cents to 123.86.  GLD still appears to be in a small wave 2 pullback.  It remains on a Buy Signal.

The Bollinger Bands continue to narrow on Crude Oil (UCO) as it appears to be forming a small wave 2 along its 50-day moving average.  The volume portion of my VTI-volume indicator on UCO remains negative, making the overall signal Neutral.  However, the volume indicator is increasing and is close to moving positive.  With tight Bands and rising volume, UCO is one of the more interesting trades on the Board.  I’m a buyer IF the signal turns positive.

That’s what I’m doing,

h

Market Signals for

02-13-2019

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