Professor’s Comments January 11, 2019

Posted by OMS  at January 11th, 2019

The markets rose again yesterday on lighter volume.  The Dow closed up 123 points at 24,002.  The NASDAQ and SPX were up 29 and 12 points, respectively.  Volume on the NYSE was only 94 percent of its 10 day moving average.  There were 11 new high and 7 new lows.

The current rally is starting to look tired from both a volume and breadth perspective. However, with the Dow and NASDAQ market timing signals still on Buy Signals, it’s possible the market can continue to push slightly higher.

Yesterday the A-D oscillator came in with another EXTREMELY overbought reading of 344.  Because this reading was 9.4 points lower than the previous day’s reading of 353.4, another small change signal was generated meaning we need to be on the lookout for another Big Move within the next 1-2 days.

The 2-period RSI on the VIX is deeply oversold with a reading of 5.59.  If the VIX begins to rise from these extremely oversold levels, the markets should begin to decline. 

The Sector Ratio strengthened to 8-16 negative after yesterday’s session. The Strong List was led by PharmaBio, Retail, Energy Real Estate, and Transportation. The Weak List was led by Food, Healthcare, Food Drugs, Technology, and Media.  It was interesting to note that even though yesterday’s strong list gained one sector, the entire Strong List dropped in RS.  PharmaBio and Retail fell to RS ratings of 1 while the rest of the sectors on the Strong List are zeros.  In other words, the Strong List is not very strong.

With mixed indicators on the cockpit, I continue to wait for the current rally to complete.  I’m still watching the 35-period CCI on the 60 min bars of the DIA, waiting for it to turn negative.  Yesterday, even though the CCI fell I the morning, it stayed positive throughout the day, keeping me from entering short positions.  Once the indicator turns negative, I will start buying and holding inverse index ETFs from the Dean’s List.

Gold (GLD) fell 0.72 cents to 121.59.  The 50-day moving average has crossed above the 200 putting GLD into an Up Trend. If GLD pulls back to the 118 -119 level in the days ahead, I will start looking for entry points to buy gold and mining stocks on the shorter-term bars.  

That’s what I’m doing,

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Market Signals for

01-11-2019

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