Professor’s Comments November 30, 2018

Posted by OMS  at November 30th, 2018

The markets were mostly flat yesterday, resting after Wednesday’s hard rally.  The Dow finished down 28 points at 25,339. The NASDAQ and SPX were down 19 and 6 points, respectively. Volume on the NYSE was moderate, coming in at 100 percent of its 10-day moving average.  There were 38 new highs and 168 new lows.

This weekend is shaping up as a possible Big Event as President Trump will meet with China’s President Xi to discuss trade and North Korea at the G-20 Meeting in Bluenose Aires.  If the two Presidents can reach an agreement on trade, I wouldn’t be surprised to see the Dow begin to skyrocket higher, possibly gaining 1,00 points from current levels.

Now that my VTI-volume indicator for the Dow, NASDAQ, SPX, and Russel 2K are on Buy Signals, I must interpret Wednesday’s hard rally as the beginning of wave ‘c’ up within Wave 2 up.  If this analysis is correct, Wave 2 up should complete slightly above the 8 November high of 26,278.  So, for now, I’m using a target of 26,300+.

There was a ‘relatively’ small change in the A-D oscillator last night of 15.6 points.  Because this number is greater than the 10-points I usually use for small change signal, I didn’t turn on the Green light on the cockpit.  However, small changes up to 15+ points have produced Big Moves in the past, so with the G-20 Meeting scheduled for this weekend, it’s likely we’ll see a Big Move come Monday.  It should be interesting to see what the A-D oscillator reading is after today’s session.

BTW, speaking of the A-D oscillator, I want to spend a few words this morning talking about Tuesday’s small change signal and how it led to Wednesday’s Big Move.  I probably don’t spend enough time talking about this signal. It’s a GREAT tool for traders. Like I teach in my Classes, a small change of 10 points or less usually leads to a Big Move of over 100 points in the Dow within 1-2 days.  This is extremely useful information for a trader.  The only thing about the signal is the that while it tells you a Big Move is coming, it doesn’t tell you the direction.  But that’s relatively easy to determine. You just to follow the direction of the initial move.

For example, going into Wednesday’s session, I was bearish.  The charts suggested the Dow was developing a small sub-wave 2 within a Wave 3 down.  So, I expected the Big Move to occur to the downside.  I had a target for sub-wave 2 near the 24,700+ level.  But when the Dow opened higher and started to exceed my target, it told me that something else was likely going on.  And the most likely scenario was that Wave 2 up was not complete.

So, knowing that a Big Move was coming, and seeing the VZO and CCI in positive territory on the short-term charts, I could no longer be looking at the short side for my scalps.  I had to be long.  When I trade, no matter if I’m using the short-term charts like the 5s or 15 minute bars, or a Daily chart, I NEVER want to be on the wrong side of the CCI , especially when the volume indicators are confirming. NEVER!!!   If I’m holding a long position and the CCI turns negative, it means that I’m wrong!  It doesn’t matter what I think.  It doesn’t matter what the wave counts are telling me. It doesn’t matter what my projected targets are.  The only thing that matters is that things have changed and IF I’m on the opposite side of the CCI…I’m wrong!  So, I need to correct it.  Immediately.

And that’s what I did on Wednesday.  I had to switch sides to get on the right side of the CCI and figure out what was happening with the wave counts later.  This is what you MUST do when you’re scalping. 

So why am I telling you this?

Well, we might have another Big Move coming after the G-20 meeting.  It could be up or down.  If the two Presidents can agree to a trade deal this weekend, you MUST position yourself to be on the right side of the CCI. On the other hand, IF there are still issues with trade and no deal is reached, and if you see the CCI turn negative, you must be prepared for a decline. 

Remember always that Elliott Wave counts are just road maps for possible targets.  They are NOT exact, and they can and do morph into other wave counts.  That’s why in the Professor’s Methodology, we use indicators.  They NEVER morph!  

So even though we might have a downside target of 23,500+, IF the indicators are not confirming that target, we MUST be open to other possibilities and change our mind if necessary.  When the VTI-volume indicator turned positive on the indexes, I had to change my mind.  That’s why my new target is 26,300+.  If something negative happens after the G-20 meeting and the indicators turn negative again, it will force me to look at the wave counts again and go from there.

But no matter what, come Monday I’m gonna be on the right side of the CCI, especially if my volume indicators are confirming the move.  It doesn’t matter what time periods I’m using to trade the move, I’m going to be on the right side of the CCI.  Period! 

With yesterday’s slight pullback in the markets, the Sector Ratio fell to 2-22 negative.  The only positive sectors are Household Products and Media.  Seeing the Sector Ratio at 2-22 negative is strange IF there’s going to be a 1,000 point rally in the Dow. If the Dow is going to rally, a lot of sectors will have to turn from negative to positive.  Right now, it’s still hard for me to see Household Products like toothpaste and toilet paper leading this market higher.  There MUST be broader participation.  So, watch the Strong Sector List for changes.

Gold was flat yesterday.  I’m still on a Sell Signal for Gold.

Crude Oil rose slightly, but it too is still on a Sell Signal.  UCO, the ETF for Crude Oil still appears to be forming a short-term bottom, but I need to see Green on the cockpit before buying.

That’s what I’m doing,

h

BTW, one of the stocks I’ll be watching today is Intel (INTC). The trade issues with China have caused semiconductor stocks to pull back. If a trade deal with China is announced, I would expect the semis and computer stocks like Microsoft (MSFT) to lead the next rally.

Market Signals for

11-30-2018

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