Professor’s Comments September 28, 2017
Posted by OMS at September 28th, 2017
The markets were up modestly yesterday. The Dow rose 56 points, closing at 22,341. The NASDAQ and SPX finished up 70 and 10 points, respectively. The intraday rise on the SPX was a new high (2511.75) for the index. Volume on the NYSE was moderate, coming in at 106 percent of its 10-day average. There were 204 new highs and 18 new lows.
Yesterday’s opening rally was likely the Big Move predicted by the A-SD oscillator. A second Big Move occurred later in the afternoon just after the White House releases details of the President’s proposed tax plan. That rally was good for over 80 points. So IF you were paying attention to the small change signal from the A-D oscillator, you actually had two opportunities to trade Big Moves during the day. If you missed these….
There was yet another small change in the A-D oscillator last night, this time the reading was less than a point, so we need to be on the lookout for a Big Move within the next 1-2 days.
The markets appear to be approaching a Major Top. However, except for the NASDAQ-100, they have still have not generated Sell Signals.
The Tide remains positive and most of the other cockpit indicators remain mixed. The VTI-volume indicator for the Dow, NASDAQ, and SPX is still on a neutral signal.
As I explained to my Class last night, I’m waiting for the Tide to turn negative. For me, everything starts with The Tide. Once the Tide turns negative, I’ll check the Sector List for the top 3-4 Weakest Sectors and look to short ETFs in those weak sectors. I will mostly be trading (shorting) ETFs on this decline, as I don’t want to take on the inherent risks of shorting individual stocks. I will also be buying several inverse index ETFs as they appear on the Dean’s List.
The reason I start with The Tide is because it is the best measure of mass market movement I know of. It tells me when most stocks on the NYSE are starting to change direction. It’s like a glacier: it usually starts out slowly, but eventually destroys everything in its path. If you trade against it, you do it at your own peril. I NEVER like to trade against The Tide, and that’s why I’m currently mostly on the sidelines. I believe the risk-reward at current market levels does not justify being long at this time. But without a negative Tide, I can’t start shorting. So, I’m just waiting for the indicators to turn before establishing new positions.
BTW, the most recent Tide turn (positive) occurred on 31 August with the Dow trading at 21,948. Last week, the Dow traded as high as 22,419, so the 31 August Tide turn has been good for over 450 Dow points so far. If you bought an index ETF, like SSO, that tracks the SPX at the open on the day after The Tide gave its signal, you’re currently up about 2.5 percent …in less than a month! Projected over 12 months, that’s about a 30 percent return for the year. Retirees and longer-term investors might want to consider this approach instead of chasing individual (risky) stocks for their 2-3 percent dividends. And that’s only IF you traded the Tide Turn using an index ETF.
If you bought the top three ETFs from my Sector Report when the Tide turned on 31 August, well…take a look for yourselves. I think you’ll agree that the Semis, Materials, and PharmaBio have all done OK. The Semiconductor Sector was up 6.3 percent during the same period. This translates into a whopping 76 percent gain for the year. Like I always say, “Follow the Tide!”
Wednesday’s Sector Report weakened slightly. The Sector Ratio fell to 17-7 positive. The Strong Sector List was led by Energy, Semis, Specialty Banks, Transportation, and Cap Equipment. The Weak Sectors are led by Household Goods, Healthcare, Consumer Products, Telecoms, and Media. Students should note how the Semis led the Strong sector report on 31 August and remain a top sector almost a month later.
Gold continued to pull back yesterday. GLD finished down 1.16 points at 121.98. It is now at a level where it could be a very interesting trade. Here’s why: Yesterday the 2-period RSI closed with an oversold reading of 16.9. The VTI closed with a reading of 40.64, so GLD is still NOT in the Trend Mode. With reading like this, GLD should bounce. It’s possible that GLD is completing a minor sub-wave within wave ‘B’ up. If this is the case, GLD could rally to the 130 level before wave ‘B’ up of 2 down completes. Also, the positive Hockey Stick pattern that has formed on GLD since early July is interesting. If the PT indicators on GLD start to turn positive, I will give gold a shot. I will be watching GDX and GDXJ for possible entry points. If GLD turns positive from its Hockey Stick Pattern, GDX could rise from 23 to over 30 before it completes wave ‘B’ up.
BTW, I don’t like the fundamentals of this gold trade because of what the Fed is doing to tighten the money supply. But for the very short-term, the Hockey Stick Pattern should trump the fundamentals (IF the indicators turn positive). Longer-term, the fundamentals will win. That’s why I’m paying attention to the indicators and looking at the current set-up as a trade only.
That’s what I’m doing,
h
Market Signals for
09-28-2017
DMI (DIA) | POS |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | POS |
SUM IND | POS |
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
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments