Professor’s Comments November 9, 2017
Posted by OMS at November 9th, 2017
The markets rose mildly yesterday. The Dow finished up 6 points at 23,563. The NASDAQ and SPX were up 21 and 4 points, respectively. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day average. There were 123 new highs and 85 new lows. Students should note that the number of new lows have been rising for the past week. This is a sign of a tired market.
There was a very small change in the A-D oscillator last night of 4 points. The back-to back small change signal produced on 2 and 3 October did not produce the expected Big Move, so it will be interesting to see if this one does.
With a pattern that suggests the Sky Rocket rally (or the thorough over wave) could be nearing completion, I would be very cautious now. Sky Rocket rallies never end well. They are very susceptible to a news event that would have traders running for the exit.
Remember, The Tide is negative, which means that most stocks on the NYSE are already starting to move lower. Only a handful of large cap issues are keeping the weighted indexes afloat. Weighting makes it appear the market is healthy. It’s not. But this does not mean that the indexes are going to crash either.
The cockpit indicators are still mostly positive. The VTI on the Dow, NASDAQ and SPY remains positive. As long as these indicators remain positive, it’s likely the indexes will continue to drift higher.
The Dean’s List remains neutral as TWM, the inverse ETF for the Russell 2K, is now on the List. BTW, the PT indicators on TWM turned positive yesterday, so the Russell 2K is on a Sell Signal.
IYT, the ETF for the trannies fell another 0.68 cents yesterday, so the negative divergence between the Dow Industrials and the Transports continues. The 2-period RSI on IYT is EXTREMELY oversold now at 1.44 with the VTI at 33, so without a Trend in place, the ETF should bounce. If it doesn’t, the VTI will likely enter the Down Trend Mode (below 30).
The level to watch on IYT is 168.14. That’s where the 200-day moving average is currently located. IYT closed at 173.33. If it breaks 168.14, it would constitute a ‘Rope Jump’ and identify the move as Wave 1 down of a new Bear Market. Holders of transportation stocks should pay close attention to the 168 level in the days (or weeks) ahead. The ETF remains on a VTI-volume Sell Signal. The PT indicators are also negative.
CSX, our local railroad, also fell slightly yesterday. The move still appears to be part of a developing ‘Blade’ a negative Hockey Stick Pattern. Continue to watch the 50.50 level, as a break of this level will likely result in a test of the 200-day moving average, now located at 48.84. Any decline below 48.84 would spell major trouble for the stock. The PT indicators are negative on CSX.
Wednesday’s Sector Report increased slightly. The Sector Ratio is now 14-10 positive. The Strong Sector List shows the Semis, Energy, Cap Equipment, Computers, and Real Estate leading the List. Financials stocks had a bad day yesterday causing the Financial and Banking Sectors to fall. The decline generated negative Delta Trend Scores of -120 and -121 in the Financial and Banking Sectors. This is something Students should watch as both Sectors are well represented in the Dow. The Weak Sectors were led by Media, Consumer Products, Telecoms, Household Products and Food. The top 5 Strong Sectors still have positive Trend Scores.
Continue to stay in stocks and ETFs in the strong sectors, but make sure you have protective stops in place. Manage these stops aggressively. As the price of the stock moves up, make sure you move your stop up too. Also think about taking a few bucks off the table at current levels. BTW, if the market does experience some type of ‘Black Swan’ event during the next few weeks, your stops might not provide the protection you think. If traders panic and start rushing for the exit door, prices could fall dramatically before your stop order is filled. I’m not saying this will occur, but it could. Remember, a lot of traders are on edge right now, watching their stocks move higher and higher looking for a place to sell. If the market starts to move lower, a lot of these high priced stocks will be dumped very quickly. That’s what happens in Sky Rocket rallies. So, think about doing some selective pruning, especially if you’re holding a stock in a Weak Sector. Continue to watch the Sector Ratio closely.
That’s what I’m doing,
h
Market Signals for
11-09-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
VTI | POS |
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
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The Hockey Stick Pattern
The Creation of Waves and Trends
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