Professor’s Comments July 3, 2018

Posted by OMS  at July 3rd, 2018

The markets fell sharply early yesterday, then rallied to close higher. The Dow finished up 36 points at 24,307.  The NASDAQ and SPX were up 59 and 8 points, respectively. Volume on the NYSE was low, coming in at 88 percent of its 10-day moving average.  There were 47 new highs and 107 new lows.  

Yesterday’s early decline was NOT the kind of impulsive positive action I expected to see IF Wave 5 up was starting.  The early decline and late rally looked more like a corrective sub-wave ‘b’ within Wave ‘e’ down.  The corrective sub-wave is starting to look like a small triangle.  If this is the case, the Dow could continue to rally early today before falling to re-test the 24,000 level later this week.  Then once Wave ‘e’ completes, the Dow should begin its Wave 5 rally toward the 26,600+ level. 

Yesterday’s trading did not change any of the cockpit indicators.  They’re still negative.  Also, my combination VTI-volume indicator remains neutral, with the volume staying positive but the momentum portion still negative.  Be patient and wait for the indicators to turn positive.

BTW, IF the Dow does fall to the 24,000 level or lower in the next week or so, I would view the decline as a major buying opportunity. Again, as long as the Dow stays above the 23,750 level, the large triangle scenario (Major Wave 4) that has been developing since 26 January remains in place. Once this large triangle pattern completes, prices should move significantly higher.

The Sector Ratio remained at 9-15 negative after yesterday’s session.  The Strong Sector List is still being led by defensive sectors like Utilities, FoodDrugs, Retail, Consumer Products and Healthcare.  This needs to change.  If the market is going to rally to new all-time highs, I would expect Technology, Cap Equipment, Computers, Banks and Financials sectors to lead the way higher. All of these Sectors are still on the Weak List.  Also, UUP re-appeared on the Dean’s List near the bottom.  This tells me that the topping process for the Dollar is still not complete.  And as long as the Dollar remains strong, the Technology and Cap Equipment sectors will have a tough time starting their next leg higher.  Again, be patient.

My combination VTI-volume indicator for GLD and SLV remains on a Sell Signal.  If the Dollar starts to decline, I would expect gold and silver to strengthen.  But right now, the indicators are still too weak for me to be interested in trading them.

That’s what I’m doing,

h

The markets will close early today and then remain closed tomorrow for the Independence Day Holiday.  Happy Birthday America!

Market Signals for

07-03-2018

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