Professor’s Comments September 26, 2017
Posted by OMS at September 26th, 2017
The markets were down yesterday. The Dow was off 56 points at 22,296. The NASDAQ and SPX were down 56 and 6 points, respectively. Volume on the NYSE was moderate, coming in at 100 percent of its 10-day average. There were 128 new highs and 13 new lows.
Yesterday’s pullback was the decline I expected for wave 4 down in the five-wave sequence to complete wave 5 up. I thought the pullback would reach approximately 22,250; it actually got as low as 22,219 before starting to rally. The rally should continue to at least the 22,400+ level before it completes. However, it could go significantly higher, but there are no guarantees. At this point, there is no way to tell. Final wave 5s have a mind of their own. They could truncate or they could develop into a ‘through-over’ wave, that would surprise a lot of traders. We’ll just have to wait for the cockpit indicators to turn negative to call the top this time.
Right now, those indicators are mostly positive. But they could change in a heartbeat.
That’s because there was a very small change in the A-D oscillator last night, this time it was only one point. So, we need to be on the lookout for a Big Move in the Dow within the next 1-2 days. The Big Move could be up or down.
Remember, the Dow is no longer at 20,400 or even 21,500. It has already hit and exceeded my target of 22,400+ by reaching an intraday high of 22,420. Yeah it pulled back yesterday (as I thought it would in a wave 4), but whether we get another run back to or above 22,400+ now is problematic. The Dow DOES NOT HAVE TO DO THIS! So IF you’re thinking the Dow is going to make one more final rally to above 22,400+, you should know that it’s probably only a 50-50 bet and from current levels, it’s only likely for about 100-150 points. I can think of a lot better (safer) things to do with my money than to make that bet. The easy money from the long side of this market has already been made. Getting the last few points from this rally will be tricky and difficult. The patterns are of limited use now, so please be careful.
The Tide and the Dean’s List remain positive, even after yesterday’s decline. I thought we might see at least one of the breadth indicators that make up The Tide turn negative after yesterday’s pullback, but it didn’t happen. All four indicators stayed positive. This tells me there is still a lot of strength left in this market…at least in the non-tech related issues. The NASDAQ is another story.
The so called “FANG’ stocks got hammered yesterday. Facebook (FB) dropped 8 points, Netflix (NFLX) dropped 9 and Google (GOOG) shed 8. Apple (AAPL) lost another 1.34 points yesterday, closing at 150.55. It’s now down over 10 points since my VTI-volume indicator turned negative. The VTI on Apple has now entered the down Trend Mode. These ‘FANG’ stocks could have dropped a lot more if wasn’t for some ‘deep pocket’ institutional investors who were matching a lot of the large sell orders with buys of their own. If these buy orders were not present, yesterday would have been a catastrophe for the ‘FANGs’.
BTW, several of the large technology stocks, like FB and GOOG, have generated long term Sell Signals on the Weekly VTI-volume indicators. If you own these stocks, you might find it interesting to note that this weekly indicator on FB turned positive on 10 February with the stock trading at 134. The indicator stayed positive for months as the stock rose to 175. But after yesterday’s trading, this weekly indicator is now negative. The Weekly VTI-volume indicator on GOOG turned negative on 28 July 28, just after the stock reached its high of 986. Yesterday GOOG closed at 921. Just saying…. Please be careful if you own any of these over-priced, high P/E technology stocks now. (BTW, Amazon (AMZN) is also on a Weekly VTI-volume Sell Signal.)
Monday’s Sector Report strengthened slightly. The Sector Ratio increased to 17-7 positive. The Strong Sector List was led by Energy, Cap Goods, Specialty Banks, Transportation and Semis. The Weak Sectors are led by Consumer Products, Household Goods, Telecoms, Healthcare, and Media. BTW, even though the Sector Ratio is better than 2:1 positive, the Relative Strength ratings in the strong sectors are nothing to get excited about as most are 1s and 0s.
Gold had a strong day yesterday. GLD finished up 1.29 points at 124.5. Yesterday’s rally caused my VTI-volume indicator to move to a neutral signal. If this signal turns positive, it’s likely that GLD will rally to the 130 level to complete wave ‘B’ up of an a-b-c pattern for Major Wave 2 down. If it doesn’t, GLD will likely continue to form a ‘Blade’ along its 50-day moving average. Then once this ‘Blade’ is complete, GLD will likely decline to the 105 level or below. Gold is at a critical level now within an a-b-c pattern that could produce a large move in either direction. How GLD performs in relation to its 50-day moving average will be critical in the days ahead. Watch gold.
That’s what I’m doing,
h
Market Signals for
09-26-2017
DMI (DIA) | POS |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | POS |
SUM IND | POS |
VTI | NEG |
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
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