Professor’s Comments July 30, 2019
Posted by OMS at July 30th, 2019
The markets were mixed yesterday. The Dow finished with a gain of 29 points, closing at 27,210. The NASDAQ and SPX were down 38 and 5 points, respectively. Volume on the NYSE was moderate, coming in at 96 percent of its 10-day moving average. There were 258 new highs and 73 new lows.
There were no changes to the market timing indicators after yesterday’s session. The Dow, NASDAQ, SPX, and Russell 2K remain on remain on weak Buy Signals.
Yesterday’s negative action on the NYSE caused The Tide to turn Neutral. The Dean’s List remains positive. Same for the Money Flow indicators on the Dow and NASDAQ.
The CCI on the Dow remains below the 100 level (No Trend), with the 2-period RSI now showing a reading of 60.3. So now the Dow is free to decline If it wants to. With the Fed announcement scheduled for Wednesday afternoon, it’s likely the market will mark time into the announcement, with a Big Move after the announcement likely…especially if traders don’t like what the Fed says.
The reason I say this is because there was a very small change in the A-D oscillator after yesterday’s session, so we need to be on the lookout for a Big Move within the next 1-2 days. I’m also seeing a significant negative divergence develop in my momentum and breadth indicators as prices push higher. These divergences are flashing RED warnings that the market is approaching a top of significance.
However, as I mentioned in the WSR, I can’t tell if this decline will be the start of the next Bear Market or only Wave ‘B’ down within an A-B-C move to complete the final waves of the Ending Diagonal for Wave 5 up. We won’t know until after we see how the decline develops. The Ending Diagonal has a target near the 24,680 level. If this level is broken, the next target is the December 2018 low of 21,712.
So, with a pattern that suggests a decline of over 2,500 Dow points is likely with more decline possible, students should pay attention to the market timing signals and the Sector Ratio. If these indicators begin to turn Negative, it will be time to start managing your money
The Sector Ratio remained at 16-8 Positive after Monday’s session. The Strong Sector List was led by Semiconductors, Healthcare, Material (includes gold), Household Products and Media. The Weak Sector List was led by Energy, Service, Retail, Utilities, and FoodDrugs.
Model Portfolio: There were NO CHANGES to the Model after yesterday’s session. The Model continues to hold 500 shares of NUGT, a 3X leveraged ETF for the Gold Miners and 800 shares of UGL, a 2X leveraged ETF for gold.
Gold and mining stocks made a nice move yesterday and appear poised for a rally within the next week or so. The Model is currently over weighted in gold related ETFs, mostly because they still appear to be the best trade on the Board. After yesterday’s session, the Model is up 21.6 percent which translates to an annualized gain of about 57 percent. The Model continues to hold a lot of cash ($68,574) waiting for high probability opportunities to put the cash to work. If the timing signals on the Dow and NASDAQ turn negative, the Model will start looking to buy shares of DXD and QID.
In my own personal trading account, I bought a few call options on GDX yesterday. I bought the 20 September 2019 calls with a strike price of 29. I purchased the options at two different times, paying an average cost of about .63 cents. When I buy options, which is rare, I usually look for a 50 percent increase. So, my initial target for the calls will be slightly above .90 cents. That’s where I’ll start managing my money, taking some off the table and protecting the rest with stops.
Remember, I’m assuming that gold is in the process of completing corrective wave 2 down and starting wave 3 of Wave 5 up (see the chart on NUGT I posted in the WSR). Wave 3 up could have started yesterday. Gold (the metal) is currently trading near 1,440. My target for wave 3 up is slightly above the 1,500 level. Once all five waves of the pattern are complete, gold should be trading near the 1,600-1,650 level.
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
That’s what I’m doing,
h
Market Signals for
07-30-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 26 Jul 2019 |
NASDAQ | POS | 24 Jul 2019 |
GOLD | POS | 29 Jul 2019 |
U.S. DOLLAR | POS | 22 Jul 2019 |
BONDS | NEG | 17 Jul 2019 |
CRUDE OIL | NEU | 29 Jul 2019 |
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
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments