Today’s Market Comments:
Stocks rose with some strength Tuesday, August 14th. The S&P 500 bounced off support at the bottom boundary of its Rising Bearish Wedge Pattern shown on page 26. There were no changes to our indicators Tuesday, the Blue Chip Purchasing Power Indicator remains on a Sell signal. However, the NASDAQ 100 Purchasing Power Indicator and the small cap Russell 2000 Purchasing Power Indicator both remain on a Buy signal. The Russell 2000 looks to be finishing a sideways Symmetrical Triangle pattern, which suggests that upon completion, the RUT will rally out of the triangle pattern. The Rising Bearish Wedge suggests the S&P 500 is putting in a top. So, this dichotomy may be telling us that there will be a rotation of money from Blue Chips to small caps as the stock market completes its Bull market from 2015 and finishes the larger Bull market from 2009.
We remain confident that a top of significance is occurring in the U.S. stock market for several reasons. First, tonight we point out that we got a new Official Hindenburg Omen Tuesday, August 14th, which means we now have two different official H.O.’s on the clock at the same time, warning of the potential for a significant stock market decline sometime over the next three months. Small caps could be the last stock market to decline. We also see global stock markets plunging right now, or about to plunge, with contagion a high probability. We also see intense monetary tightening by the Fed. We also see the 40 percent large corporation tax cut failing to produce significant new job growth, wasting a critical bullet that should have focused more on small businesses which generate most new jobs. We also see that large degree Technical Analysis patterns warn that a major top is approaching.
Precious metals and Mining stocks are dropping in the concluding waves for corrective wave 2-down. Usually the final waves in metals and miners are the most dramatic, which is what we are seeing now. A major Bull market should start once this correction is finished. A new Buy signal in our HUI key trend-finder indicators would confirm the end of the corrective decline.
Our Blue Chip key trend-finder indicators moved to a Neutral signal August 10th, 2018 and remain there Tuesday, August 14th. The Purchasing Power Indicator component triggered a Sell signal Monday, August 13th. The 14-day Stochastic Indicator generated a Sell on August 10th, and the 30 Day Stochastic Indicator generated a Buy on July 9th, 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 Buy signal Tuesday, July 3rd, and remains there Tuesday, August 14th, rising 6 points (out of a possible 9 points), positive + 19, needing to fall below the negative – 5 threshold for the new Sell.
Demand Power rose 5 to 383 Tuesday while Supply Pressure fell 6 to 378, telling us Tuesday’s rise in Blue Chips was moderate. This DP/SP Indicator moved to an Exit Long Signal Monday, July 13th, and remains there Tuesday, August 14th, 2018.
The Plunge Protection Team Indicator moved back to an “OFF” signal on March 21st, which means the PPT is not as 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, or if there is it will not be effective. 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 and Silver were flat Tuesday, w hile Mining stocks fell. They generated a Sell signal Friday, July 13th, as the HUI 30 Day Stochastic triggered a Sell signal July 13th, and our HUI Purchasing Power Indicator generated a Sell on June 15th. When these two indicators are in agreement, it is a directional signal, and when at odds with one another, it is a combination neutral signal. On May 29th, the HUI Demand Power / Supply Pressure Indicator moved to a Short signal. On Tuesday, August 14th, Demand Power fell 4 to 366 while Supply Pressure rose 4 to 429, telling us Tuesday’s HUI decline was moderate.
DJIA PPI Rose 4 to + 76.75, on a Sell
DJIA 30 Day Stochastic Fast 56.67 Slow 55.33 On a Buy
DJIA 14 Day Stochastic Fast 43.33 Slow 60.00 On a Sell
DJIA % Above 30 Day Average 56.67
DJIA % Above 10 Day Average 40.00
DJIA % Above 5 Day Average 33.33
Secondary Trend Indicator Rose 6 to Positive + 19, On a Buy
Demand Power Rose 5 to 383, Supply Pressure Fell 6 to 378 Neutral
McClellan Oscillator Fell to negative – 37.47
McClellan Osc Summation Index + 2023.99
Plunge Protection Team Indicator + 2.03, on an “OFF”
DJIA 10 Day Advance/Decline Indicator + 37.0 on a Buy
NYSE New Highs 89 New Lows 77
Today’s Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated aNeutral signal Friday, August 10th, 2018, and remain there August 14th, 2018. The NDX Purchasing Power Indicator generated a Buyon August 2nd, the NDX 14 Day Stochastic triggered a Sell signal on August 10th, 2018 and the 30 Day Stochastic triggered a Buysignal on July 6th. 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 anExit Buy positions signal Monday, August 13th and remains there August 14th. On Tuesday August 14th, Demand Power rose 2 to 416, while Supply Pressure fell 2 to 413, telling us Tuesday’s rise was mild.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal August 6th, 2018, and needs to fall below negative – 5.0 for a new Sell. It rose to positive + 5.8 on Tuesday, August 14th.
NDX PPI Rose 4 to + 271.85 On a Buy
NDX 30 Day Stochastic Fast 56.67 Slow 55.33 On a Buy
NDX 14 Day Stochastic Fast 43.33 Slow 60.00 On a Sell
NDX 10 Day Advance/Decline Line Indicator + 5.8 On a Buy
NDX Demand Power Up 2 to 416, Supply Pressure Fell 2 to 413 Buy
RUT PPI Rose 4 to 192.21 on a Buy
RUT 10 Day Advance/Decline Line Indicator + 75.3 On a Buy
Today’s Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Sell signal July 13th, 2018.
HUI PPI Fell 1 to 166.10, on a Sell
HUI 30 Day Stochastic Fast 5.00, Slow 17.78 on a Sell
HUI Demand Power Fell 4 to 366; Supply Pressure Up 4 to 429, Sell