Professor’s Comments November 27, 2018

Posted by OMS  at November 27th, 2018

The markets rallied hard yesterday.  The Dow closed up 354 points at 24,640.  The NASDSQ and SPX rose 143 and 41 points, respectively.  Volume on the NYSE was moderate, coming in at 93 percent of its 10-day average.  There were 14new highs and 146 new lows.

Yesterday’s rally was the Big Move predicted by Friday’s small change in the A-D oscillator. The rally was likely part of a small corrective wave within sub-wave 3 down within Wave 3 down. If it’s a small wave 2, it could retrace back to the 24,700+ level before it completes. If it’s part of sub-wave 4, the rally could push a bit higher in choppy trading and last for several more days.

There was no change to any of the cockpit indicators after yesterday’s session. Because of this, I’ll be looking to re-establish my short positions in inverse index ETFs on any rally.  I’ll use the indicators on the short-term bars to trigger the trade.

I’m still using 23,500 as my initial target for Wave 3 down on the Dow.

The Sector Ratio rose to 4-20 negative after yesterday’s session.  The Strong List was led by Media, Leisure, Household Products and Autos.  I found it interesting that the Autos joined the Strong List. It’s likely because General Motors (GM) rose 1.72 points yesterday after the company announced it was cutting almost 15,000 jobs.  Hmmm?  Maybe the Fed’s tightening of the money supply is starting to impact the economy. Cutting costs by laying people off usually produces a short pop in the price of a stock.  But whenever an auto maker starts producing less cars, it’s never a good sign for the overall economy. 

Gold and mining stocks fell slightly yesterday.  My VTI-volume indicator for gold remains on a Neutral Signal.

Crude Oil rose slightly yesterday and appears to be putting in a short-term bottom.  UCO, the ETF I use to trade crude oil, rose 0.22 cents to 17.49.  IF the current decline in crude oil is part of an a-b-c correction, yesterday’s close at 51.63 could have been the completion of wave ‘a’ down. If I’m right about this, crude oil could rally back to the 59-60 level in wave ‘b’ up before falling to the 45 level to complete the pattern.  An 8-point rise in crude could produce a nice short-term gain in UCO which is a leveraged ETF.  If my VTI-volume indicator for Crude Oil turns positive, I’ll become extremely interested in UCO.

That’s what I’m doing,

h

Market Signals for

11-27-2018

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