Professor’s Comments June 7, 2018

Yesterday’s rally caused the DMI on the Dow to turn positive.  So now, all the cockpit indicators are on Buy Signals. The VTI-volume indicator on the SPX also turned positive after yesterday’s trading action, so now the VTI-volume indicator is positive and on a Buy Signal on all the major market indexes.  

It appears that final Wave 5 up is underway.  The theoretical target for Wave 5 up on the Dow is above the 26 January high of 26,617.  However, IF a ‘through-over’ wave develops, Wave 5 up could approach the 28,000 level.  I would expect Wave 5 up to continue for several months.

One caution:  Right now, even though the VTI on the Dow is positive and on a Buy Signal, it is still NOT in the Trend Mode.  So, with the 2-period RSI showing an overbought reading of 93.5, it’s possible the market can pull back at any time.  This would be perfectly normal for where we are in the pattern.  Remember, the ride to 26,617+ will NOT be straight up.  The rally should occur in five distinct waves.

Also, right now almost everything I look at is positive.  However, as the rally develops and approaches the final top, fewer and fewer stocks will be participating. The weakening of the breadth indicators will be the first sign that a final top is approaching.  But this is NOT happening now.  Right now, all systems are go.

With positive indicators on the cockpit, I’m Buying and HOLDING stocks in strong sectors.  I’m also looking to add to these positions on any pullbacks.  Also, with the NASDAQ and SPX in the Trend Mode, this is when I’ll be using Rifle Trades to add to my Basic Position, buying stocks when the 2-period RSI becomes oversold and selling them when the RSI becomes overbought.

The Sector Ratio rose to 19-5 positive after yesterday’s session.  The Strongest Sectors are Healthcare, Retail, Computers, Semiconductors, and Energy.  The Weakest Sectors are Household Products, Foods, Telecoms, Service, and Media.  I continue to look for opportunities to Buy and HOLD stocks in the strongest sectors.  As long as the Sector Ratio maintains its positive bias, Buying and HOLDING stocks will be my primary strategy.  

Remember, when the markets are NOT Trending, scalp trading is the preferred strategy.  But now that 3 of the 4 major markets are in the TREND MODE, the preferred strategy changes to Buy and HOLD.

Gold and the miners were mostly flat yesterday.  GLD finished up 0.07 cents at 122.92   My combination VTI-volume indicator on GLD remains on a neutral signal. However, the VTI-volume indicator on SLV, the ETF for silver, moved to a Buy Signal.  SLV appears to be completing final wave ‘e’ of a 2-year triangle. If it can move above the 17 level now, it would confirm the breakout and project a move toward the 23-24 level.

That’s what I’m doing,

h

Market Signals for

06-07-2018