Professor’s Comments September 19, 2017
Posted by OMS at September 19th, 2017
The markets were up slightly yesterday. The Dow was the biggest gainer, closing up 63 points at 22,331. The NASDAQ and SPX finished up 4 and 6 points, respectively. Volume on the NYSE was moderate, coming in at 93 percent of its 10-day average. There were 167 new highs and 14 new lows.
The Fed will be holding its much anticipated meeting during the next 2-days. They will likely announce the start of their massive ‘unwinding’ or selling program at 2pm tomorrow. In previous meetings they talked about selling as much as $80 Billion per month. This would be an enormous amount of selling for the market to absorb. Its effect would be a tightening of the money supply, which should cause the Dollar to rise, but put pressure on the U.S. economy and its equity markets.
Remember, back in 2009, it was the Fed’s QE stimulus (buying) program of about $4.5 Trillion that started the current Bull Market. So now, with over $4 Trillion of assets on the books (that we know about) they are indicating that they want to unwind (sell) a good portion of those assets. If this happens, it will not be a good thing for the American economy.
There was a small change in the A-D oscillator last night of 5 points, so we need to be on the lookout for a Big Move within the next 1-2 days. The Big Move could occur right after the Fed announcement.
Yesterday’s rally appeared to be the continuation of sub-wave 3 up within wave 5 up. If this is the case, the markets should be close to a short-term top. The overall Ending Diagonal pattern still suggests higher prices, probably to the 22.400+ level but there are no guarantees about this number. Ending Diagonals can truncate at any time, so we will need to pay attention to the indicators. As long as they remain positive, the markets will likely chop higher. However, once they start to turn negative, they could be signaling the end of the five wave Major Bull Market that started back in March 2009. When the indicators turn, that’s when I’ll become aggressive in buying inverse index ETFs as they appear on the Dean’s List.
Monday’s Sector Report was unchanged. The Sector Ratio remains at 18-6 positive. The Strong Sector List continues to be led by the Semis, Energy, PharmaBio, Utilities and Computers. The Weak Sectors are led by Media, Telecoms, Consumer Products Household Goods, and Service.
Gold continued to pullback yesterday. GLD fell 1.17 points to 124.34. Last week when GLD was at 128, I mentioned that GLD would likely pull back to its 50-day moving average which was at the 122.56 at the time. Yesterday, the 50 was at 122.87. It still represents a likely target for this decline. If this happens, I’ll be watching for a new Buy Signal on my VTI/volume indicator, because the pullback could be corrective wave ‘b’ inside an a-b-c correction for wave ‘B’ up. If the indicator turns positive, GLD should rally to about the 131-132 level before wave ‘B’ completes. After that, it will likely be all downhill for gold for several months as prices could dip below the 105 level.
Waiting for the Fed announcement at 2pm tomorrow.
That’s what I’m doing,
h
Market Signals for
09-19-2017
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | POS |
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