Today’s Market Comments:

Stocks oscillated throughout the day Tuesday, November 13th, the Industrials ending down 100, the S&P and Small caps down slightly, techs flat, Trannies up slightly. The price action looks to be part of a small degree corrective rally, correcting the sharp selloff from November 8th, through early intraday today. The other possibility is Tuesday’s price action was part of subwave{iv} down of {1} down. This {1} down move from November 8th is the start of a powerful wave 3-down move.

 

The October plunge of 2700 points in the Industrials was the same degree wave 1 down as this commencing wave 3 down, and wave 3‘s are usually the most dramatic waves, which if so, means a powerful plunge is starting that will eclipse the October plunge significantly. The S&P 500 and NASDAQ 100 have formed possible Head & Shoulders Bearish Tops over the past few weeks. See charts on pages 25 through 30.

 

There was a small change in the McClellan Oscillator Tuesday, suggesting there could be a large move in stocks over the coming days. There were no changes to our key trend-finder indicators Tuesday. This is an odd set up, because we are headed into what is normally a Bullish seasonal period for the stock market, however, the charts and indicators are not happy about what is coming. There is a very Bearish technical picture at this time.

 

Oil is plunging, precious metals are dropping, real estate is in the tank, stocks are dropping, Bonds are falling The value of everything is declining. Deflation is all over the place, yet the Fed is tightening the money supply like crazy. They must reverse course or else they will plunge the economy and markets into a Great Recession or Depression.

 

The economy is not strong, new job growth has been weak for months, the statistics reported have been goosed up by uncounted jobs estimated from new business start-ups they hope occurred. The 40 percent large corporation tax cut failed. It predictably boosted earnings, but revenues are weak. A huge amount of the tax savings was used for stock buy backs, temporarily artificially inflating stock prices, but the recent plunge is wiping out those tax savings stock value gains. It’s gone. With so little of the tax cut going to the Middle class and small businesses, we are left with larger federal deficits, and a huge missed opportunity to boost the economy over the long run. It is small businesses that create 70 percent of new jobs, not large corporations, and it is consumers that account for 70 percent of GDP spending, not large corporations, yet the Middle class got a pittance from the tax cut. This was a colossal mistake. For the Middle class, it was a zero sum game, a tiny tax cut, that was wiped out by the rise in health insurance premiums.

 

Between the Fed’s insane (too much too fast) Quantative Tightening policy and its aggressive increase in interest rates (again too far, too fast), along with the ineffective large corporation tax cut fiscal policy, the U.S. economy is getting slammed beneath the surface, and the markets are not missing this point. They are all Bearish at this time. The likelihood of a Middle class tax cut that is meaningful, and the likelihood of a health insurance premium solution is very low, given the political realities at this time. That leaves the Fed. If they fail to reverse course, and soon, the economy and stock market will tank, and it will be very hard to bring them back before great pain strikes.

 

At some point the Fed will face enough pressure to get smart, probably too late, but when they do, or when the markets expect they will, precious metals and Mining stocks should fly high. For now, metals and Miners are finishing corrective wave 2-down.

 

Our Blue Chip key trend-finder indicators moved to a Sell signal November 12th, 2018 and remain there Tuesday, November 13th. The Purchasing Power Indicator component triggered a Sell signal Friday, November 9th. The 14-day Stochastic Indicator generated a Sell on November 12th, and the 30 Day Stochastic Indicator generated a Sell on November 12th, 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 Tuesday, November 13th, losing 3 points (out of a possible 9 points), to negative -18. It will need to rise above positive + 5 for a new Buy signal.

Demand Power fell 1 to 413 Tuesday while Supply Pressure fell 4 to 429, telling us Tuesday’s decline in Blue Chips was mild. This DP/SP Indicator moved to an Enter Short Signal November 12th, and remains there Monday, November 12th, 2018. The previous Sell signal identified the start of the October plunge.

The Plunge Protection Team Indicator moved to an “OFF” signal on October 25th, which means the PPT is not likely to support the markets while this indicator remains on an “OFF.” This means there is not 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 fell Tuesday . They generated a Sell signal Thursday, October 25th, as the HUI 30 Day Stochastic triggered a Sell signal October 24th, and our HUI Purchasing Power Indicator generated a Sell on October 25th. 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 Short signal Wednesday, October 24th. On Tuesday, November 13th, Demand Power fell 4 to 382 while Supply Pressure rose 2 to 438, telling us Tuesday’s HUI decline was moderate.

DJIA PPI fell 1 to 24.80, on a Sell

DJIA 30 Day Stochastic Fast 46.67 Slow 68.00 On a Buy

DJIA 14 Day Stochastic Fast 70.00 Slow 86.11 On a Buy

DJIA % Above 30 Day Average 46.67

DJIA % Above 10 Day Average 43.33

DJIA % Above 5 Day Average 13.33

Secondary Trend Indicator Fell 3 to Negative -18, On a Sell

Demand Power Fell 1 to 413, Supply Pressure fell 4 to 429 Sell

McClellan Oscillator Fell to Positive + 29.00

McClellan Osc Summation Index – 323.67

Plunge Protection Team Indicator – 14.81, on an “OFF”  

DJIA 10 Day Advance/Decline Indicator + 152.3 on a Buy

NYSE New Highs 28 New Lows 151

Today’s Technology NDX Market Comments:

The NDX Short-term key Trend-finder Indicators generated a Sell signal Monday, November 12th, 2018, and remain there November 13th, 2018. The NDX Purchasing Power Indicator generated a Sellon November 9th, the NDX 14 Day Stochastic triggered a Sellsignal on November 12th, 2018 and the 30 Day Stochastic triggered a Sell signal on November 12th. 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 Monday, November 12th and remains there November 13th. On Tuesday November 13th, Demand Power fell 1 to 448, while Supply Pressure fell 6 to 462, telling us the rise was weak.

 

The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal November 1st, 2018, and needs to rise above positive + 5.0 for a new Buy. It fell to positive + 6.4 on Tuesday, November 13th.

 

NDX PPI Flat at 160.96 On a Sell

NDX 30 Day Stochastic Fast 39.29 Slow 52.38 On a Sell

NDX 14 Day Stochastic Fast 46.43 Slow 68.10 On a Sell

NDX 10 Day Advance/Decline Line Indicator + 6.4 On a Buy

NDX Demand Power Fell 1 to 448, Supply Pressure Fell 6 to 462 Sell

RUT PPI Fell 1 to 145.29 on a Sell

RUT 10 Day Advance/Decline Line Indicator + 64.7 On a Buy

 

Today’s Mining Stocks and Precious Metals Market Comments:

Our HUI key trend-finder indicators moved to a Sell signal October 25th, 2018.

HUI PPI Fell 1 to + 157.59, on a Sell

HUI 30 Day Stochastic Fast 10.00, Slow 33.33 on a Sell

HUI Demand Power Fell 4 to 382; Supply Pressure Up 2 to 438, Sell