Professor’s Comments May 1, 2018

Posted by OMS  at May 1st, 2018

The markets fell hard yesterday from overbought conditions.  The Dow was down 148 points, closing at 24,163.   The decline was the Big Move predicted by Friday’s small change in the A-D oscillator.  The NASDAQ and SPX were down 54 and 22 points, respectively.  Volume on the NYSE was moderate, coming in at 103 percent of its 10-day moving average.  There were 71 new highs and 50 new lows.

Yesterday’s decline was likely part of sub-wave ‘c’ down of Wave ‘’e’ down in the Major triangle pattern that has been developing since 26 January.  If this is what’s happening, the Dow should decline to about the 23,500-23,800 level before Wave ‘e’ down completes.

The final leg of a sideways Bullish triangle usually does not get as low as the previous lows.  That’s why I will be watching the area near the 23,800 level as a potential buying opportunity.

Last night, my combination VTI-volume indicator generated a new Sell Signal.  This indicator had been extremely reliable at identifying the major turning points in the triangle.  So, it will get my attention the next time it turns positive.

Yesterday, the 2-period RSI on the Dow closed with a slightly oversold reading of 26.9.  So, once again the Dow is slightly overbought with NO TREND in place.  This condition could lead to a small short-term rally within sub-wave ‘c’ down, especially with a neutral Tide and a neutral Dean’s List.  Students should remember that even though sub-wave ‘c’ down should see slightly lower prices, the sub-wave is still a corrective wave within a larger corrective wave, so IF the Dow does decline to the 23,500-23,800 level, any decline will not be straight down.

Also, as I mentioned in the WSR, the slope of the final wave is usually much shallower than slope of the previous declining waves of the triangle.  This is what we’re seeing now and is another good indication that the current decline is NOT associated with the start of a new Bear market.

So, continue to watch the indicators as the final waves of the triangle complete. The market could be approaching a major buying opportunity.  Another thing we want to watch on the indicators is for them to enter the Trend Mode.  Since 4 April, the VTI and CCI have been showing NO TREND conditions.  This is why I have been scalping the market whenever the 2-period RSI has been overbought or oversold.  However, once the VTI and CCI enter the positive TREND ZONE, I’ll start holding my long positions for the ride higher.  It could be a nice ride.  But not yet…..

Yesterday’s Sector Ratio fell to 5-19 negative.  So, the Sectors are mostly negative now. Energy, Utilities, Leisure, Food Drugs, and Healthcare were the Strongest Sectors.  The Semis, Real Estate, Housing, Autos, Banks, Financial, and Cap Equipment led the Weak List.  This needs to change.  So, for the next week or so, watch the Sector List.  IF you see the list start to gain strength and turn neutral (50-50), it should give us a heads-up that the market is approaching a bottom.  Then look for it to turn positive. This will be my all clear signal. 

The other thing I’ll be watching is the Professor algorithm.  Right now, he’s sleeping.  But IF I’m right, and the market starts to rally once wave ‘e’ of the triangle completes, The Professor should be wide awake and singing.  So, I’ll be curious to see how many stocks he starts to highlight.  Remember, 50 or more usually lead to a rally of 750 Dow points.  But given that the triangle that has developed for Major Wave 4 has been large, I would expect the rally for Major Wave 5 up to be large as well, probably to new highs, so The Professor should be screaming.  We’ll see.

Gold and mining stocks fell yesterday.  Gold appears to be completing the final waves of a Bullish triangle pattern for Major Wave 2 down.  My combination VTI-volume indicator is currently on a neutral signal for gold.

That’s what I’m doing,

h 

Market Signals for

05-01-2018

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

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.