Professor’s Comments January 25, 2018
Posted by OMS at January 25th, 2018
The markets were mixed again yesterday. The Dow rose 41 points, closing at 26,252. The NASDAQ and SPX fell 45 and 2 points, respectively. Volume on the NYSE was moderate, coming in at 107 percent of its 10-day average. There were 363 new highs and 38 new lows.
Not much changed with the indicators yesterday. Everything is still positive on the cockpit and the Sector Ratio remains EXTREMELY strong. However, stocks in the Transportation Sector got hammered yesterday with IYT, the transportation ETF, dropping 2.95 points. The trannies are a leading indicator, so anytime they fall on a day when the Dow Industrials rise, I’m always suspicious about the rally. My combination VTI-volume indicator is still on a Buy Signal for the transportation sector, but the volume portion of the indicator is falling fast. If the indicator generates a Sell Signal, I’ll let you know.
After yesterday’s action, the Dow appears to have completed a small Rising Wedge or Ending Diagonal Pattern that started with the gap opening on 17 January. If this is the case, the Dow could pull back to where the pattern began which is near the 25,800-25,900 level. If this happens, I would view the pullback as a buying opportunity.
From a longer-term perspective, continue to ride the horse. Stay in stocks and ETFs in the strong sectors and avoid those in weak sectors.
Yesterday’s Sector Ratio remained at 23-1 positive. The only weak sector is the Utilities. The sector fell almost 25 points yesterday and remain on the VTI-volume Sell Signal generated on 28 November. BTW, since the Utes generated their VTI-volume Sell Signal, they have dropped almost 8 percent while the Dow has gained over 2,400 points. It pay$ to be in the right sectors.
The strongest sectors continue to be Retail and Healthcare, followed closely by FoodDrugs, Energy, Specialty Banks, Services, Leisure, Material, and Media. If the Dow does start to pullback from its small wedge pattern, I will be looking for Rifle Trades in the strong sectors.
Gold and most mining stocks rallied yesterday. GLD rose 1.55 points to 128.43. The 2-period RSI on GLD rose to an overbought reading of 97.53, so the ETF is now EXTREMELY overbought. My VTI-volume indicator on GLD remains on a Buy Signal. It still appears that GLD will test the 135 level on this leg up, but I still don’t expect the move to be straight up. BTW, GLD closed right at its upper Bollinger Band yesterday, so if the ETF pulls back today, it could generate a Bollinger Band Sell Signal. If this happens, GLD could pullback to the 123-124 level.
I closed out my Rifle Trade on GDX yesterday after the ETF reached overbought conditions at 24.80. I don’t get greedy when I use the Rifle. So now I’m back to holding a Basic Position in gold. IF the 2-period RSI on GDX becomes oversold during the next week or so, I’ll look to establish another Rifle Trade.
That’s what I’m doing,
h
Market Signals for
01-25-2018
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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