Professor’s Comments May 8, 2017

Posted by OMS  at May 8th, 2018

The markets rose yesterday but did not break out of their triangle patterns.  The Dow finished up 95 points at 24,357.  The NASDAQ and SPX finished the day up 56 and 9 points, respectively.  Volume on the NYSE was moderate, coming in at 95 percent of its 10-day moving average.  There were 113 new highs and 59 new lows. 

Yesterday’s rally was accomplished on relatively light volume.   Light volume rallies at this point in the triangle tell me that the pattern probably needs another few days before a breakout occurs.  In other words, the market is still not committed to starting a new major change in direction.  A move above 24,600 will be needed for that.

My combination VTI-volume indicator on the Dow and NASDAQ is getting close to generating a Buy Signal. But close doesn’t count.  Be patient and wait.

Also, I checked in with The Professor last night and he only had 32 stocks highlighted as longs.  So he doesn’t see a rally starting yet either.  I need to see The Professor highlight 50 or more stocks as longs before I become aggressive.  Right now, all I’m doing is looking to buy a few ‘trial’ positions.

I did buy some silver (SLV) yesterday and added to my position in GDX.  Other than these longer-term purchases, I was on the sidelines, watching.

Today, IF the markets pull back like I expect, I’ll look for opportunities to buy a few index ETFs.  The days immediately following a Jobs Report usually offer limited upside potential, so I’m not in any rush to put a lot of my money to work.  But IF the market does pull back, I’ll probably look to buy a few more shares of the NASDAQ or the Russell 2K ETFs.  These indexes have more domestic companies in them and are less affected by a rising dollar.  But again, I’m not in any hurry to buy.

The main reason is the Sector Ratio.  Last night it came in at 20-4 negative.  I need to see it improve.  Right now, with only four positive sectors, Energy, Utilities, Healthcare, and Leisure, there isn’t much to get excited about.  I still believe that IF this market is going to break out of the large triangle pattern its been in since 26 January, it will need participation from the Semis, Banks, and Financials.  The Dow is not going to 26,000+ without them.  So, be patient.  But if the Dow stays above 23,500, continue to maintain a Bullish Bias.

That’s what I’m doing,

h

Market Signals for

05-08-2018

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