Today’s Market Comments:

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Stocks bounced back Friday, October 12th. The Industrials retraced about 18 percent of last week’s plunge. The stock market topped on our recent Phi mate turn date October 3rd, and declined sharply afterwards. The rise Friday is either subwave {iv} up of a five wave decline, wave 1-down of a long-term Bear market, or is starting wave 2-up, correcting the decline from October 3rd. On page 35 we show a chart mapping the recent decline, Friday’s bounce, and a projection of where stock prices go from here.


In the chart on page 33, it is evident that the 50 Week Moving Average is very important support for the Industrials. It has stopped every decline since 2016. It stopped the plunge this past week. Interestingly, it is also sitting precisely at the bottom boundary of the rising trend-channel from 2015. Here is the point: if this key support level is broken, batten down the hatches, a terrifying crash could follow. Next support would be 20,300, the 200 Week Moving Average.


Until prices break decisively below 25,000, perhaps to 24,500, we cannot be 100 percent sure wave v-up completed. The power of this past week’s decline argues that wave v-up has ended, and the Bull market from 2015 is over. One more significant decline would be convincing.


While the charts allow for the Bull market to be hanging on by a thread, downside momentum last week supports the belief that the Bull market from 2015 is complete. The final wave v-up formed Rising Bearish Wedge patterns to identify the end, as they are termination top patterns. These patterns give downside price targets, which will be the initial downside price targets for the new Bear market. Those downside price targets are 24,000 in the Industrials, 2,600 in the S&P 500 and 6,400 in the NASDAQ 100. More downside is likely as the Bear market proceeds.

There will be short-term rallies as this Bear market continues, and some of those rallies could be explosive. Our Plunge Protection Team Indicator moved to an “On” signal which means the odds are high that the PPT is buying the market hard and could force a short-covering countertrend rally at any time, like we saw Friday. Several indicators are showing the stock market is approaching a short-term oversold level. While more downside is possible over the short-run, possibly wave {v} down of 1 down, we must be watchful for a short-covering corrective rally wave 2-up that could be strong before wave 3-down takes stocks over the cliff.

The rally Friday moved our Blue Chip and NASDAQ 100 Purchasing Power Indicators to new Buy signals, changing our short-term key trend-finder indicators to Neutral from Sell. The small cap Russell 2000 Purchasing Power Indicator remains on a Sell. The Secondary Trend Indicator remains on a Sell. Volume was lower on Friday’s rally than the preceding decline, which is not Bullish.

Our HUI key trend-finder indicators generated a new Buy signal Thursday, October 11th, as Mining stocks rose sharply. These markets could have completed wave 2-down and are now starting wave 3-up. If so, this could be a dramatic Bull market starting. The HUI Demand Power / Supply Pressure Indicator also triggered a new Buy signal Thursday.

Our intermediate degree Secondary Trend Indicator generated a new Sell signal Wednesday, October 10th. It had triggered a Buy signal on our Phi mate turn date back on July 3rd, 2018, which led to a 212 point rise in the S&P 500. This indicator tracks multi-month trends, and is resistant to the noise of short-term trends.

This stock market plunge is coming after a 19 observation Hindenburg Omen potential stock market crash signals was generated in August. The observations were continuous over the weeks since, and warned that this stock market is in a fragile condition. New NYSE Lows have run above 79 for 29 consecutive trading days, which is a dangerous condition. 

Our Blue Chip key trend-finder indicators moved to a Sideways signal October 5th, 2018 and remain there Thursday, October 11th. The Purchasing Power Indicator component triggered a Buy signal Friday, October 12th. The 14-day Stochastic Indicator generated a Sell on October 5th, and the 30 Day Stochastic Indicator generated a Sell on September 25th, 2018. When these three indicators agree, it is a short-term (1 week to 3 months’ time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.

Our intermediate term Secondary Trend Indicator generated a Sell signal Wednesday, October 10th, and remains there Friday, October 12th, rising 6 points (out of a possible 9 points), to negative – 10. It will need to rise above positive + 5 for a new Buy signal.

Demand Power rose 10 to 362 Friday while Supply Pressure fell 5 to 433, telling us Friday’s rise in Blue Chips was strong with half the buying coming from shorts covering. This DP/SP Indicator moved to an Enter Short Signal October 4th, and remains there Friday, October 12th, 2018.

The Plunge Protection Team Indicator moved to an “ON” signal on October 11th, which means the PPT is likely to support the markets while this indicator remains on an “ON.” This means there is likely to be significant government intervention at this time. This indicator is designed to identify high probability periods where the PPT will be supporting, or buying the stock market (when it is on an “On” signal) and when it moves to a Neutral or Off signal (formerly called Sell), it does not mean the stock market will decline, it means the PPT’s interest in buying the market is off rather than on, and market forces outside the PPT are more likely to determine stock trends up or down. In other words, a Neutral or Off signal means the odds are higher that the PPT stands down or has little influence on price trends. 

Caution: I would not bet the farm on a Crash. Crashes are rare and maybe the pattern will morph into something we presently do not see that is less ominous. Risk must be managed. Maybe the Fed buys the entire stock market, who knows given their track record. Maybe a black swan event is postponed several months.

Gold, Silver and Miners were flat Fr iday. They generated a Buy signal Thursday, October 11th, as the HUI 30 Day Stochastic triggered a Buy signal October 11th, and our HUI Purchasing Power Indicator generated a Buy on September 19th. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator moved to an Enter Long signal Thursday, October 11th. On Friday, October 12th, Demand Power fell 5 to 411 while Supply Pressure rose 6 to 408, telling us Friday’s HUI move was moderate.

DJIA PPI rose 7 to 35.47, on a Buy

DJIA 30 Day Stochastic Fast 6.67 Slow 31.33 On a Sell

DJIA 14 Day Stochastic Fast 6.67 Slow 25.56 On a Sell

DJIA % Above 30 Day Average 6.67

DJIA % Above 10 Day Average 6.67

DJIA % Above 5 Day Average 13.33

Secondary Trend Indicator Rose 6 to Negative -10, On a Sell

Demand Power rose 10 to 362, Supply Pressure fell 5 to 433 Sell

McClellan Oscillator Rose to Negative – 221.59

McClellan Osc Summation Index -127.04

Plunge Protection Team Indicator + 27.1, on an “ON”  

DJIA 10 Day Advance/Decline Indicator – 784.9 on a Sell

NYSE New Highs 10 New Lows 396

Today’s Technology NDX Market Comments:

The NDX Short-term key Trend-finder Indicators generated aSideways signal Friday, October 12th, 2018, and remain there October 12th, 2018. The NDX Purchasing Power Indicator generated a Buy on October 12th, the NDX 14 Day Stochastic triggered a Sell signal on October 4th, 2018 and the 30 Day Stochastic triggered a Sell signal on October 4th. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.


The NDX Demand Power / Supply Pressure Indicator moved to anEnter Short positions signal Thursday, October 4th and remains there October 12th. On Friday October 12th, Demand Power rose 18 to 406, while Supply Pressure fell 8 to 458, telling us the rise was strong with most of the buying coming from shorts forced to cover, triggered by deep pockets intervention buying.


The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal October 4th, 2018, and needs to rise above positive + 5.0 for a new Buy. It rose to negative -27.2 on Friday, October 12th. 

NDX PPI Rose 26 to 201.85 On a Buy

NDX 30 Day Stochastic Fast 4.76 Slow 11.67 On a Sell

NDX 14 Day Stochastic Fast 4.76 Slow 7.62 On a Sell

NDX 10 Day Advance/Decline Line Indicator -27.2 On a Sell

NDX Demand Power Up 18 to 406, Supply Pressure Fell 8 to 458 Sell

RUT PPI Flat at 150.17 on a Sell

RUT 10 Day Advance/Decline Line Indicator – 615.60 On a Sell

Today’s Mining Stocks and Precious Metals Market Comments:

Our HUI key trend-finder indicators moved to a Buy signal October 11th, 2018.

HUI PPI Flat at + 167.42, on a Buy

HUI 30 Day Stochastic Fast 85.00, Slow 51.67 on a Buy

HUI Demand Power Fell 5 to 411; Supply Pressure Up 6 to 408, Buy