Professor’s Comments March 20, 2019

Posted by OMS  at March 20th, 2019

The markets were mixed yesterday.  The Dow lost 27 points, closing at 25,887.  The NASDAQ gained 9 points while the SPX was flat.  Volume on the NYSE was moderate, coming in at 95 percent of its 10-day moving average. There were 104 new highs and 18 new lows. 

The Fed will be announcing its latest policy on interest rates at 2pm today.  The announcement has the potential to change the direction of the market, either up or down.  At this point, the overall pattern of the market is still unclear.  I can make arguments for both sides. This is one of the reasons that at 10.15 yesterday, I posted a change to the Model Portfolio that essentially took a good portion of the money at risk off the table. I don’t see any point in risking money when the odds are only 50-50.

There were no changes to any of the market timing signals after yesterday’s session.  The Dow (DIA), NASDAQ-100 (QQQ), S&P500 (SPY), and Russell 2K all remain on Buy Signals.

The Tide turned back to neutral after yesterday’s session.  The Summation Index and the A-D oscillator both turned negative.  The A-D oscillator had been negative since 28 February warning that the current rally might be a fake out.  But on 18 March, it turned back to positive supporting the current rally.  However, after yesterday’s session, the Oscillator has turned negative again, continuing to warn that the breadth is NOT that healthy.  This is one of the reasons the Model took some money off the table going into the Fed Meeting.

Another reason for lightening up is the Sector Ratio.  Yesterday the Sector Ratio fell to 18-5 positive. If you recall, the Ratio has been EXTREMELY positive (20+ positive sectors or more) for the past few weeks supporting the rally.  But yesterday, it changed and became less positive. The last time we saw a change in the ratio, it marked the beginning of the current rally. So, given that there is no clear Bullish pattern in place, the need for caution is warranted.

The Strong List was led by Semiconductors, Household Products, Healthcare, Technology, and Utilities.  The fact that the Utes are back near the top of the Strong List could also be a tell for things to come. The Weak Sectors are FoodDrugs, Autos, Media, Leisure, and Telecoms.

Gold and mining stocks were flat again yesterday. GLD rose 0.34 cents to 123.38.  The ETF finished on a down candlestick that suggests that wave ‘b’ up of Wave 2 down might be over.  If this is the case, wave ’c’ down could take the metal back down to the 1250 level before wave ‘c’ down completes.  This would mean that GLD could trade back down to the 120 level before Wave 2 down completes.  BTW, 120 is approximately where the 200-day moving average is currently located.

Crude Oil (UCO) pulled back slightly yesterday, with UCO falling 0.15 cents to 20.79.  UCO still appears poised to test its 200-day moving average currently located at the 22.68 level.  UCO has completed five small waves up on the short-term bars and may need to correct in a small 4 wave before moving higher.  If the pullback occurs, the Model will look to re-establish its full position. 

BTW, one of the reasons I’m cautious about crude oil is because it’s STILL in a down trend on the daily charts. The 50 is still below the 200, so taking a full position in UCO is still a risky bet.  Normally I like to wait until the 50 crosses above the 200 to establish a full position, but given that it’s March, a favorable time for energy, the Model over weighted crude oil. 

Model Portfolio:  There were several changes to the Model during yesterday’s session.  The positions in gold (UGL) and the NASDAQ(QLD) were sold at the 10.15 mark.  The position in Crude Oil (UCO) was reduced by half. 

So now the Model is only holding a half position, 665 shares, of UCO.  The remainder of the theoretical $100,000 portfolio, $88,922.47, remains in cash.

BTW, yesterday’s rally put the Model’s overall gain at $2,747.82 without taking commissions into account.  The Model was started on 26 February, so it’s been in effect for about 3 three weeks.  During the period, the Model has gained 3.01 percent vs. a gain of 1.30 percent for the S&P.

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

03-20-2019

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

All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.