Today’s Market Comments: Bob McHugh, Ph.D. 

Stocks rose Wednesday, January 9th, in what was weakening internals for the rally from December 2018. This could be a sign that the rally is losing steam. The NASDAQ 100 and Russell 2000 are close to reaching resistance at their 50 day moving averages, which could prove to be a possible topping level. Our short-term key trend-finder indicators remain on Buy signals tonight. Stocks are approaching overbought levels, as the McClellan Oscillator and 10 day average Advance/Decline Line Indicators are at historically extreme overbought levels.

 

The wave mapping has several possibilities, which we show in updated charts in tonight’s report. It is even possible that a five wave impulsive decline started at the October 3rd highs for the Industrials, and wave 4-up is finishing now, with 5-down next. See chart on page 28. There is some evidence this is a good fit for several reasons including alternation and proportionality for waves 2-up and 4-up. However, if this is the case, stocks must top now. Further upside would move us to one of the other wave mappings we show tonight. There is a Bradley model turn date coming next week, a major turn date. It could be pointing to a top.

 

Precious metals and Mining stocks rose Wednesday. Mining stocks remain on a Sideways signal Tuesday. Their 50 day moving average is curling up, and is headed for its declining 200 day moving average. A crossover would be a bullish golden cross. Same development is occurring for Gold and Silver.  

Our Blue Chip key trend-finder indicators moved to a Buy signal January 4th, 2019 and remain there Wednesday, January 9th, 2019. The Purchasing Power Indicator component triggered a Buy signal Friday, January 4th. The 14-day Stochastic Indicator generated a Buy on January 4th, and the 30 Day Stochastic Indicator generated a Buy on January 4th, 2019. 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 Wednesday, January 9th, rising 3 points (out of a possible 9 points), to negative -8. It will need to rise above positive + 5 for a new Buy signal.

Demand Power rose 1 to 434 Wednesday while Supply Pressure fell 9 to 420, telling us Wednesday’s rise in Blue Chips was moderate, and due more to a lack of selling rather than a strong urge to buy. This DP/SP Indicator moved to an Enter Long Signal December 9th, and remains there Wednesday, January 9th, 2019. 

The Plunge Protection Team Indicator moved to an “OFF” signal on January 2nd, 2019, which means the PPT is not as likely to support the markets while this indicator remains on an “OFF.” This means there is n 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. Maybe a massive short-covering rally is induced by the PPT that causes a violent rally just when market participants are expecting more selling.

Gold, Silver and Miners rose Wednesday. The HUI generated a key trend-finder indicator Sideways (Neutral) signal Wednesday, January 2nd, as the HUI 30 Day Stochastic triggered a Buy signal January 2nd, 2019, and our HUI Purchasing Power Indicator generated a Sell on December 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 Wednesday, December 12th. On Wednesday, January 9th, Demand Power rose 3 to 426 while Supply Pressure fell 5 to 410, telling us Wednesday’s HUI rise was moderate.

DJIA PPI rose 2 to negative -13.53, on a Buy

DJIA 30 Day Stochastic Fast 43.33 Slow 28.00 On a Buy

DJIA 14 Day Stochastic Fast 93.33 Slow 72.22 On a Buy

DJIA % Above 30 Day Average 43.33

DJIA % Above 10 Day Average 93.33

DJIA % Above 5 Day Average 90.00

Secondary Trend Indicator Rose 3 to Negative -8, On a Sell

Demand Power Rose 1 to 434, Supply Pressure Fell 9 to 420 Buy

McClellan Oscillator Rose to Positive + 354.37

McClellan Osc Summation Index – 784.63

Plunge Protection Team Indicator -12.23, an “OFF” signal

DJIA 10 Day Advance/Decline Indicator + 41.2 on a Buy

NYSE New Highs 12 New Lows 10

Today’s Technology NDX Market Comments:

The NDX Short-term key Trend-finder Indicators generated a Buy signal Friday, January 4th, 2019, and remain there January 9th, 2019. The NDX Purchasing Power Indicator generated a Buy on January 4th, the NDX 14 Day Stochastic triggered a Buy signal on December 27th, 2018 and the 30 Day Stochastic triggered a Buysignal of January 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 Long positions signal Tuesday, January 8th and remains there January 9th. On Wednesday January 9th, Demand Power rose 1 to 456, while Supply Pressure fell 5 to 438, telling us the rally was mild.

 

The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal January 7th, 2019, and needs to fall below negative -5.0 for a new Sell. It rose to + 41.2 on Wednesday, January 9th.

 

NDX PPI Rose 3 to 104.68, On a Buy

NDX 30 Day Stochastic Fast 57.32 Slow 35.37 On a Buy

NDX 14 Day Stochastic Fast 92.86 Slow 75.00 On a Buy

NDX 10 Day Advance/Decline Line Indicator + 41.2, On a Buy

NDX Demand Power Up 1 to 456, Supply Pressure Fell 5 to 438 Buy

 

RUT PPI Rose 3 to 118.13, on a Buy

RUT 10 Day Advance/Decline Line Indicator + 723.3 On a Buy

 

Today’s Mining Stocks and Precious Metals Market Comments:

Our HUI key trend-finder indicators moved to a Sideways (Neutral) signal January 2nd, 2019.

HUI PPI Rose 1 to + 170.74, on a Sell

HUI 30 Day Stochastic Fast 95.00, Slow 85.56 on a Buy

HUI Demand Power Up 3 to 426; Supply Pressure Fell 5 to 410, Buy