Professor’s Comments July 11, 2018

Posted by OMS  at July 11th, 2018

The markets were mixed yesterday. The Dow was up 143 points, closing at 24,920.  It got as high as 24,945. The NASDAQ and SPX were up 3 and 10 points, respectively. Volume on the NYSE was moderate, coming in at 98 percent of its 10-day moving average.  There were 140 new highs and 19 new lows.

Yesterday was the fourth consecutive day the Dow rallied for 100 points or more.   It needs a rest.  Students can see this by looking at the 2-period RSI and the Trend indicators.  After yesterday’s close, the 2-period RSI on the Dow was showing an overbought reading of 97.4, while the 35-period CCI was only at 38.86.  For the Dow to be in the Trend Mode, the CCI needs to be above 100.  So, the Dow is overbought with NO Trend in place.  Usually when this happens, the market pulls back.

I would view any pullback at this point as a buying opportunity.  This assumes of course that the indicators stay positive.  If the indicators, especially my VTI-volume indicator, remains positive, everything should be OK.  However, IF the indicators start to turn negative, that’s a different story.  Why?  Well, even though we’ve seen impulsive action for the past few days, which is a strong sign that Major Wave 5 up is underway, there is always the possibility that the current rally is only wave ‘b’ up within Wave ‘e’ down.  So, IF the indicators turn negative, wave ‘c’ of Wave ‘e’ down could still drop the Dow down to the 24,000 level or below.  Right now, with positive indicators across the board, this appears to be a very low possibility.  But I wanted to mention it so students know what the downside risk would be IF the indicators turn negative.

Students should remember that no market or stock goes straight up.  They move up in five distinct waves.  The past few days of impulsive rally on the Dow was likely Wave 1 up within Major Wave 5 up.  So now, with an overbought RSI and NO Trend in place, market, the Dow should begin its Wave 2 pullback.  This is where most stocks will develop the ‘Blades’ of their Hockey Stick Patterns, patterns that will take them significantly higher as Wave 3 up begins to unfold.  The Wave 2 pullback is where I will be looking for buying opportunities.

After yesterday’s session, the Sector Ratio remained at 19-5 positive. 

The Strong Sector List continues to be led by defensive sectors like Energy, Consumer Products, and Food Drugs.  However, the Semiconductors, Computers, PharmaBio, Cap Goods, Financials, Banks, and Materials sectors continue to move up on the Strong List.   It should be interesting to watch how the List makes the transition from defensive sectors to offensive sectors during the Wave 2 pullback.  I continue to believe that Wave 3 of Major Wave 5 up will begin once the ‘offensive sectors’ take over the Strong Sector List.  

Gold and the miners fell slightly yesterday. GLD finished down 0.22 cents at 118.93.  My combination VTI-volume indicator for GLD and SLV remains on a Sell Signal.  Students should start watching HUI, the gold miners index now.   Yesterday the HUI closed at 179.7, slightly below its 200-day moving average at 183.7.  If the HUI can move above its 200 in the days ahead, it would be a Major accomplishment.  My VTI-volume indicator on gold continues to creep higher, but it still has not generated a Buy Signal.  It’s getting close!

That’s what I’m doing,

h

Market Signals for

07-11-2018

One hour video recorded from May 28, 2016 The Professor’s Signs of a Major Market Turn – Prospectives and the Projected Timing and Levels One hour streaming video – includes webinar handouts The Professor usually holds an update class whenever the Market looks like it may be making a major turn. If you have been following the Professor’s Comments you know that a turn is due….. LEARN MORE

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The Hockey Stick Pattern
The Creation of Waves and Trends
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