Professor’s Comments November 21, 2019
Posted by OMS at November 21st, 2019
The markets fell yesterday on slightly heavier volume than the previous day. This is important because volume usually begins to pick up on declines and dried up on rallies as the market approaches an important top. The Dow finished with a loss of 113 points, closing at 27,821. The NASDAQ and SPX were down 44 and 12 points, respectively. Volume on the NYSE was moderate, coming in at 107 percent of its 10-day moving average. There were 92 new highs and 85 new lows.
Yesterday’s decline was NOT impulsive, so it was likely part or all of a small wave 4 correction within final Wave 5 up. If this is the case, the market should find its footing soon, and begin to push higher as final Wave 5 up completes in late November or early December. A move below 27,600 on the Dow now would be cause for concern, as this is the level where major Trend Line support is currently located. A decline below 27,600 would likely mean the top is in.
I continue to see large negative divergences developing between breadth and price. After yesterday’s session, the Up-Down oscillator turned negative joining the Hi-Lo indicator, the Summation Index and the A-D oscillator in negative territory. This makes The Tide negative. Yesterday market the tenth consecutive day that the A-D oscillator has been negative. To say this is a Red Flag in a generally rising market is an understatement.
The markets remain at a critical point in their patterns, showing negative divergences and sentiment readings that suggest they could begin to change direction in the days ahead.
There were no changes to the market timing indicators after Friday’s session. The Dow, SPX, NASDAQ, and Russell 2K remain on Buy Signals.
The Dean’s List remains Positive. The Tide is Negative.
The Sector Ratio fell to 13-12 Positive after Wednesday’s session. Yesterday’s decline produced the largest change in the Ratio in several weeks. With a 13-12 positive reading, it tells me that the market is beginning to transition as now there are almost as many sectors moving down than up. The Strongest Sectors were Healthcare, Food Drugs, Semiconductors, Insurance and Banks. Students should note how the Strong Sector List is becoming more defensive, as the aggressive sectors like Technology, Retail and Consumer Products have moved to the bottom of the Strong List. Eventually these sectors will move to the Weak List. It will be interesting to see if this change in character (becoming more defensive) continues as we approach the end of November.
The Weak Sectors were Energy, Material, Food, Utilities, and Service.
Gold (GLD) rose 0.07 cents to 138.76. Gold continues to work its way through its Wave 4 triangle. I still believe the odds are high that GLD will fall to the 134-135 level before Wave 4 completes. I’m just waiting for a change in signal before re-purchasing my gold shares.
Bonds (TMF) appeared to break out of their triangle pattern yesterday as they generated a Buy Signal. The rally caused TMF to move above its 50-day moving average. I’m not in any rush to buy Bonds here, mostly because most stocks or ETFs usually pause for a breather after performing a ‘Rope Jump’. Also, IF equities rally to complete Wave 5 up, this will put pressure on the Bonds causing them to develop the ‘Blade’ of its Wave 2 Hockey Stick. I’d much rather purchase Bonds AFTER I see the ‘Blade’ develop.
UCO (crude oil ETF) rose 0.97 cents yesterday, reversing Tuesday’s decline. Crude still appears to be developing an a-b-c pattern for its next leg within the triangle. Yesterday rally appeared to be the completion of wave ‘b’ down and the start of wave ‘c’ up. If this is the case, UCO should continue to chop higher, breaking above the 19 level. Once this happens the ETF will be free to move several points higher.
There were NO CHANGES to the Model yesterday. The Model continues to hold 1,500 shares of UCO, 800 shares of DXD and $82,270 in cash. The Model plans to use its cash to buy additional shares of inverse index ETFs once the timing signals on the equity indexes turn negative. The Model is up 28+ percent after Wednesday’s session.
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
11-21-2019
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 25 Oct 2019 |
NASDAQ | POS | 24 Oct 2019 |
GOLD | NEU | 14 Nov 2019 |
U.S. DOLLAR | NEU | 14 Nov 2019 |
BONDS | POS | 20 Nov 2019 |
CRUDE OIL | NEU | 18 Nov 2019 |
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.
Category: Professor's Comments