Professor’s Comments September 5, 2018

Posted by OMS  at September 5th, 2018

The markets fell hard early, then recovered most of their losses by the end of the day.  The Dow finished down 12 points, at 25,952. The NASDAQ and SPX lost 18 and 5 points, respectively.  Volume on the NYSE was moderate, coming in at 110 percent of its 10-day moving average.  There were 126 new highs and 93 new lows. 

Last week, I mentioned that the number of new lows was increasing, enough to turn the Hi-Lo indicator negative.  This increase in new lows caused The Tide to turn neutral.  I said, I wouldn’t worry about this for now, but if The Tide turns negative, that would be a concern.  Well, yesterday, all of the other breadth indicators that make up The Tide turned negative making The Tide negative.  So, now I’m concerned.

The combination of a negative Tide and a pattern that suggests the market could decline over the next few weeks also has me concerned.  Like I said a few weeks ago, I have been using the 26,000 level on the Dow as my target for Wave 3 of Major Wave 5 up.  Since reaching the 26,000 level, the Dow has struggled to move higher and now appears extremely vulnerable to a Wave 4 decline. This is NOT the time to be aggressive.

Yesterday, the SPX got as low as 2,885 before bouncing into the close. The bounce made for a nice Rifle Trade on the shorter-term bars.  However, because of the poor breadth, the ‘bounce’ was not healthy, so if the SPX declines during the next week or so, I won’t be looking for Rifle Trades with a negative Tide.  Instead, I’ll be watching the lower trend line of the Ending Diagonal Pattern on the SPX which is currently located near the 2,850 level.  A break of 2,850 would project significantly lower prices for the SPX and I would not want to be trading it to the long side if this happens.  A break of 2,850 could start a decline to the 2,580 level.

There were no changes to The Professor’s VTI-volume indicator signals for the major equity markets after yesterday’s session.  But the indicator is close to turning negative. negative.  The signal for the Bond market remains neutral.  Gold and the Dollar are also on neutral signals.

The Sector Ratio dropped to 18-6 positive after yesterday’s session. Students should watch the Ratio during the next few days. If it turns negative, it would be a strong indication that Wave 4 down is starting to develop.

The Strong Sector List continues to be led by Household Products, PharmaBio, FoodDrugs, Telecoms, Transportation, and Cap Goods.  The Consumer Products sector has a large negative change in Delta Trend Score (-121).  Changes like this often lead to further weakness in the Sector.

The Weak List was led by Foods, Media, Autos, Healthcare and Materials.

Gold (GLD) fell 0.58 cents to 112.93.  After bouncing off its 16 August low, the gold ETF appears to be forming the ‘Blade’ of a small Hockey Stick Pattern.  It will be interesting to see if this ‘Blade’ support provides the springboard for the next rally leg in gold.  The BLS will be releasing the August Jobs Report numbers on Friday.  This could cause significant changes to the signals for the Dollar, Gold, and Bonds.  Pay attention to the signals. 

That’s what I’m doing,

h 

BTW, yesterday the VTI volume indicator for EWC, the ETF for Canada, joined several of the European ETFs on Weekly Sell Signals. It appears that the recently imposed tariffs are starting to impact the country’s trade and equity markets. The pattern on EWC suggests it could drop several points during the next few weeks.

Market Signals for

09-05-2018

Professors Major Market

Timing Signals for

09-05-2018

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

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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