Professor’s Comments February 22, 2019
Posted by OMS at February 22nd, 2019
The market fell hard after the open yesterday but regained about half of its losses by the close. The Dow finished down 104 points, closing at 25,851. The NASDAQ and SPX finished down 30 and 10 points, respectively. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day moving average. There were 90 new highs and 8 new lows.
There were no changes to my market timing signals for equities. All major equity indexes remain on Buy Signals. The Tide and Dean’s List remain positive.
Yesterday’s early decline was likely the Big Move predicted by Wednesday’s small change in the A-D oscillator.
The market remains at a critical cross road this morning, where the overall patterns are not clear. It’s possible that the decline that occurred last October was a corrective Wave 4 within the Bull Market and not the start of a new Bear. If this is the case, the rally off the late December low is part of Wave 5 up, which means the indexes could make new highs on the current move. On the other hand, even if the current rally is a Wave 5 up, these waves can and do truncate, so the current rally doesn’t have to make new highs.
The Wave 2 up within Wave 3 Down scenario is still a possibility, but if this is happening, the markets need to start dropping hard soon. Right now, even though I continue to see negative divergences in the volume indicators, the momentum indicators are very strong enabling the markets to move higher.
This is the why the cockpit timing indicators are so important now. As long as the indicators remain positive, it’s likely the current rally will continue.
The Sector Ratio increased slightly to 22-2 positive after yesterday’s session. The Ratio continues to remain strong, with several ‘aggressive’ sectors’ leading the way higher. If the Ratio remains strong, it tends to support the Wave 5 up scenario. The Strong List was led by Household Products, Service, Semiconductors, Technology, Banks, and Cap Goods. The two Weak Sectors were Food and Food Drugs. I should mention that even though the Strong List remains very positive, five sectors… PharmaBio, Media, Energy, Telecoms, and Autos are only hanging on by a thread with ‘0’ RS Ratings. One good down day could put these sectors back on the Weak List.
BTW, one other negative I did see yesterday was what happened with Alphabet-Google (GOOG). The stock dropped 17 points to 1097 which put its VZO/CCI indicators in danger of turning negative. The reason I mention this is because its sister FANG stock, Amazon (AMZN) is already showing negative indicators and hovering near the right shoulder of a short-term H&S Pattern. So, IF AMZN begins to break below its 8 February low of 1588, AND GOOG turns negative, it would spell trouble for the large cap technology stocks on the NASDAQ-100. A break of trend line support on GOOG near 1090 would likely turn my VTI-volume indicator negative. It’s just something to watch at this point.
Gold continued its pullback yesterday. GLD dropped 1.43 points to 125.05. The short-term pattern continues to suggest that sub-wave 1 up has completed and sub-wave 2 down is underway. Once sub-wave 2 completes, GLD should begin a significant wave 3 of Wave 3 rally. Gold remains on a Buy Signal. I will be looking for opportunities to buy gold on the current pullback. I’m watching the 2-period RSI on GLD for oversold conditions.
BTW, the Dollar (UUP) moved back to a Buy Signal last night. So, with the Dollar moving higher, it should put pressure on gold. It’s just another reason why I believe gold and mining stocks will be available at better prices in the days ahead. Be patient.
Crude Oil (UCO) fell 0.15 cents to 19.66 yesterday. UCO’s indicators continue to show strength and should test of overhead resistance of its 200-day moving average located at 23.35. Crude Oil (UCO) remains on a Buy Signal.
That’s what I’m doing,
h
Market Signals for
02-22-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 15 Feb 2019 |
NASDAQ | POS | 07 Jan 2019 |
GOLD | POS | 25 Jan 2019 |
U.S. DOLLAR | POS | 21 Feb 2019 |
BONDS | NEG | 21 Feb 2019 |
CRUDE OIL | POS | 13 Feb 2019 |
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Category: Professor's Comments