Professor’s Comments February 28, 2019

Posted by OMS  at February 28th, 2019

The markets were mixed yesterday. The Dow fell 73 points, closing at 25,986.  The NASDAQ was up 5 points while the SPX dropped 2 points.  Volume on the NYSE was moderate, coming in at 104 percent of its 10-day moving average. There were 94 new highs and 21 new lows.

The markets remain at a critical juncture this morning where they can go either way.  I still have one scenario that allows them to continue to push higher, while another suggests a three wave a-b-c pullback is about to begin.  Again, forget the scenarios…pay attention to the indicators.

The thing I’m watching now is breadth. Yesterday, even though the A-D oscillator remained positive, it finished with its lowest reading (6.3) since 31 December.  Another down day today and the oscillator will likely turn negative.  This would turn The Tide neutral.  BTW, the A-D oscillator is not the only breadth indicator that is close to turning negative, as the Summation Index and Hi-Lo oscillator are also very close to turning negative.  This is important because IF the The Tide turns negative, it increases the odds for a corrective Wave 2 a-b-c pullback.  And right now, the pattern in my negative scenario suggests the pullback could drop the Dow to the 24,500-24,800 level.  Again, pay attention to the indicators.  As long as the indicators remain positive, the markets should continue to push higher.

I’m also watching the volume portion of the VTI-volume indicator for the Dow.  It too is close to turning negative.  But close only counts in horse shoes, hand grenades, and atom bombs.  However, with President Trump in Vietnam today for a second summit meeting with North Korean leader Kim Jong Un, atom bombs are on the table.  If a deal is reached (or not reached), the markets could experience a lot of volatility.

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.

The Sector Ratio remained at 23-1 positive after yesterday’s session. The Strong List was led by Household Products, Semiconductors, Technology, Service, and CapGoods.  The only Weak Sector was FoodDrug.

Gold pulled back yesterday with GLD dropping 0.89 cents to 124.69.  The volume portion of my VTI-volume indicator is close to turning negative, which could turn its timing signal neutral.  If the signal does turn neutral, it increases the odds that the metal is starting a small wave 2 pullback.  I continue to view pullbacks as buying opportunities for gold.  Last night the 2-period RSI on GLD closed with an oversold reading of 16.4.  So, with GLD in an Up Trend (50>200) I’ll be looking for opportunities to add gold to the Model Portfolio using Rifle Trading Techniques, just like I did with Crude Oil recently.

Crude Oil (UCO) rose 0.82 cents yesterday, one day after we purchased our shares for the Model Portfolio.  Crude Oil remains on a Buy Signal.  BTW, even with yesterday’s nice pop, UCO oil still appears to be developing a small wave 2 ‘Blade’ along its 50-day moving average.  This might take a few more days to complete.  The ‘Blade’ should enable UCO to test its 200 currently near 23.12.

Model Portfolio:  The Model remains 25 percent invested in Crude Oil (UCO) and 75 percent in cash.

That’s what I’m doing,

h

Market Signals for

02-28-2019

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