Weekend Strategy Review April 22, 2018

Posted by OMS  at April 22nd, 2018

The markets fell hard on Friday.  The Dow was down 202 points, closing at 24,463.  It was up 103 points for the week.  The NASDAQ was down 92 points on Friday, but up 39 points for the week. 

Friday’s decline appeared corrective within a rising pattern for final Wave ‘C’ up of Major Wave 2 up.  However, the decline did cause my combination VTI-volume indicator to turn negative on the Daily chart, generating a Sell Signal. The same indicator remains positive on the Weekly chart.

The Tide and the Dean’s List remain neutral.  The Sector Ratio finished the week at 18-6 positive. Also, with the VTI heading down, but still showing a positive bias (above 50), it means the momentum is still positive.  So, with a pattern that suggests the Dow is undergoing a sub-wave 2 correction in a zig-zag, the indicators are pretty much where they should be at this point. If the Tide, Dean’s List, Sector Ratio, and momentum start to turn negative, it would cause me to change my relatively Bullish outlook.  But not now.  The zig-zag pattern still appears to need one more final rally before the Wave 2 top is in. I’m still thinking the Dow will top in late May-early June, probably near the 25,500+ level.

Also, with the VTI showing a reading of 55.9 and the CCI at 3.5, it means the market is in a NO TREND condition.  The 2-period RSI on the Dow closed with an oversold reading of 15.2.  So, with an oversold market and NO TREND in place, the market should bounce.  The A-D oscillator closed with a neutral reading of 0.02 on Friday. So, IF the market starts to bounce early next week, it will likely turn the breadth indicators positive again, which would be a good indication that sub-wave 3 up of Wave ‘C’ up is starting.  

Energy, Technology, Material, Leisure and Computers lead the Strong Sector List.  The Relative Strength of all but three of the Sectors is 2 or above.  In other words, the Strong List is still pretty strong.  The Weak List was led by the Autos, Real Estate, Food, Retail and Food Drug.  The Relative Strengths of the Weak Sectors were mostly -1s and zero.  So, the Strong Sectors are a lot stronger than the Weak Sectors are weak.

BTW, even though the market fell hard on Friday, the Leisure Sector held up well.  Las Vegas Sands (LVS), a stock I mentioned on Friday, rose 0.05 cents.  Hmmm?  A strong stock in a down market, with a nice pattern, in a sector that appears to be gaining strength.  I bought a few shares near Friday’s lows.  The stock is testing its upper trend line now.  If it breaks above 75, I’ll add to my position.  Students might also want to look at the Weekly chart and note the consolidation triangle that has developed since 29 January.  That consolidation pattern could be the Blade of a very large Hockey Stick Pattern. It’s just another reason why I’m interested in LVS.  

Bottom Line:  I wouldn’t get too negative yet.

Gold and most mining stocks pulled back on Friday.  GLD fell 0.97 cents to 126.6.  My VTI-volume indicator on gold remains on a Buy Signal.

Have a great weekend.

That’s what I’m doing.

h

Market Signals for

04-23-2018

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