Professor’s Comments September 27, 2018

Posted by OMS  at September 27th, 2018

The markets had a typical Fed Day yesterday.  Up in the morning, then reversing after the announcement to finish lower.   Large cap stocks on the Dow finished down 107 points at 26,385 after being up 114 points prior to the announcement.   The NASDAQ and SPX were down 17 and 10 points, respectively.  Volume on the NYSE was moderate, coming in at 103 percent of its 10-day moving average.  There were 60 new highs and 111 new lows. The bearish divergence in breadth continues. 

The Fed raised short-term interest rates for the third time this year.  The central bank’s Federal Open Market Committee increased its benchmark federal funds rate, setting a range of 2 percent to 2.25 percent, and continued to signal one more rate hike in 2018.  The policy-setting board removed the word “accommodative” from its statement.  However, the board continues to plan three additional rate hikes for 2019 and one in 2020.

Yesterday’s early rally in the NASDAQ caused a slight change to the pattern on the chart of the QQQ I presented this weekend.  So, instead a three wave A-B-C pattern for Wave 2 up, the pattern appears to have morphed into a five wave zig-zag or flat pattern.  I updated the chart, so you can see the pattern.  The key to the NASDAQ remains the 180.5 level.  If this level is broken, it will likely take the other markets down with it.  The reason I’m focusing on the NASDAQ now is because IF I’m right about the current wave being a Wave 2, the next wave down should be an impulsive Wave 3.  Wave 3s are fun waves to trade…IF you’re on the right side of the trade. Again…watch the 180.5 level.

When looking at the chart, students should also note the large Hanging Man Candlestick that formed yesterday.  The Hanging Man is a very Bearish candle that usually forms at the end of a move.  

There were no changes to any of my key market timing indicators after yesterday’s session.  However, the Up-Down Oscillator turned negative joining the other three breadth indicators in negative territory, making The Tide negative.  So now that The Tide has turned negative, I’ll be watching the VTI-volume indicators closely.  If they turn negative, I’ll start shorting or buying inverse index ETFs as they appear on the Dean’s List.

My market timing indicator for gold and the Dollar remains neutral, but negative for Bonds.  The indicator for Crude Oil remains positive

The Sector Ratio fell to 15-9 positive after yesterday’s session.  The Strong Sector List continues to be dominated by ‘defensive’ sectors like Household Products, PharmaBio, Telecoms, FoodDrugs and Transportation. The Materials Sector, which includes gold, remains near the middle of the Strong List, with a RS rating of 1.  

The Weak Sector List was led by Semiconductors, Banks, Healthcare, Real Estate, Utilities, and Financials.

Students should continue to hold stocks in the strongest sectors and avoid those in the weak sectors.

Gold (GLD) fell 0.60 cents to 113.05.  My VTI-volume indicator for gold remains on a neutral signal.  However, the same indicator for the gold miners remains positive. The Bollinger Bands on GLD continue to narrow, indicating that a Big Move is likely coming.  With gold looking like it wants to put in a bottom, I’m still waiting patiently for a possible Buy Signal.

That’s what I’m doing,

h

Market Signals for

09-27-2018

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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