Today’s Market Comments:

The stock market generated its 7th Hindenburg Omen observation Wednesday, over the past 8 trading days. This continuing run of observations is plainly telling us that the stock market sits in a dangerous place at this time. Stocks dropped Wednesday, May 29th, the Industrials plunging 404 points intraday to complete a small five wave move down within wave c-down of B-down, before bouncing in a corrective rally into the close, finishing down 221 points. The Industrials closed decisively below their 200 day moving average support level.

The three Head & Shoulders top patterns we see for the Industrials, S&P 500, and NASDAQ 100 are all now complete and confirmed, meaning they reached their right shoulder necklines, and meaning the probability of these averages reaching their minimum downside price targets has risen. Those downside targets are 24,000 for the Industrials, 2,650 for the S&P 500, and 6,800 for the NASDAQ 100. There could be some rally bounces along the way to lower prices.
 
Every key indicator we track is now on a Sell signal. The NASDAQ 14 day Stochastic and the NYSE 10 day average Advance/Decline Line Indicators both generated new Sells Wednesday. This is the worst month of May for the stock market since 2012.
 
The U.S. Treasury yield curve is inverted, and has the widest negative spread since 2007, just before the Great Recession. This inversion pattern is typically a forerunner to economic recessions. Japan’s interest rates just went negative, a sign of global economic slowing.
 
Two major catalysts for the coming economic recession are extreme weather hitting the U.S. food supply and China’s threat to tariff or shut down exports of rare earth metals to the U.S. Rare earth metals are a critical component in the technology and electronics industry, which pretty much affects the majority of our GDP.  80% of rare earth imports by the U.S. come from China, who we happen to be in a trade war with.
 
While little is being said, or reported about the devastation to U.S. farms and communities from bizarre weather, this is a major threat to the U.S. economy. We just saw the 12thconsecutive day of 8 tornados or more to hit the U.S., with flooding destroying thousands and thousands of acres of farm land, shutting down planting season, and ergo, harvests. Fort Smith Arkansas is the second largest city in Arkansas, and is under water. The Mississippi is about to reach its second highest level ever. These are the recent developments, on top of the floods in Nebraska, Iowa, Idaho, Colorado, Missouri, Kansas etc. 16 tornados so far this year in – New Jersey???? Really? Tornados in the Amish farm lands of Ohio and Pennsylvania? Never happens. Isn’t it time to acknowledge this and ask the question, “Why?” A cynic might wonder if weather manipulation with 5G or other microwave frequencies, laser beams from satellites, chemtrails, heat wave walls, and Lord knows what might be occurring. Or, a cynic might question if this is weather warfare from a foreign nation with high tech capabilities in retaliation for tariffs or for the pure sinister purpose of it? It is time for real answers to what is going on? Why is this happening? The weather the past several years is increasingly “the worst,” “the most extreme”, “the first time ever,” etc. This is, and will, affect the American economy here in 2019 and beyond.
 
The U.S. political civil war is not good for the economy or markets either, it already has shut down a massive and very necessary infrastructure nationwide program. This is getting worse, not better.
 
Gold formed a Shooting Star candlestick pattern Wednesday, which is often an indication of a short-term top. Gold looks like it is about to start the final wave (c)-down leg of its final wave {e} down of wave 2-down to complete the Handle of the Cup and Handle pattern, and complete the Bullish Descending Bullish Wedge.
 
Our Blue Chip key trend-finder indicators generated a Sell signal May 28th, 2019 and remain there Wednesday, May 29th, 2019. The Purchasing Power Indicator component triggered a Sell signal Monday, May 20th. The 14-day Stochastic Indicator generated a Sell on May 23rd, and the 30 Day Stochastic Indicator generated a Sell on May 28th, 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 Thursday, May 9th, and remains there Wednesday, May 29th, dropping 7 points (out of a possible 9 points), to negative -21. It will need to rise above positive + 5 for a new Buy signal.

Demand Power fell 4 to 366 Wednesday while Supply Pressure rose 4 to 408, telling us Wednesday’s Blue Chip decline was moderate. This DP/SP Indicator moved to an Enter Short Signal May 9th, and remains there Wednesday, May 29th, 2019. 

The HUI generated a key trend-finder indicator Sell signal Thursday, April 18th, as the HUI 30 Day Stochastic triggered a Sell signal April 16th, 2019, and our HUI Purchasing Power Indicator generated a Sell on April 18th. 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 April 16th. On Wednesday, May 29th, Demand Power was flat at 377 while Supply Pressure fell 2 to 417, telling us Wednesday’s HUI rise was weak.

DJIA PPI fell 4 to positive + 24.57, on a Sell

DJIA 30 Day Stochastic Fast 26.67 Slow 37.33 On a Sell

DJIA 14 Day Stochastic Fast 23.33 Slow 40.00 On a Sell

DJIA % Above 30 Day Average 26.67

DJIA % Above 10 Day Average 10.00

DJIA % Above 5 Day Average 3.33

Secondary Trend Indicator Fell 7 to negative -21, On a Sell

Demand Power Fell 4 to 366, Supply Pressure Rose 4 to 408 Sell

McClellan Oscillator Fell to negative -161.49

McClellan Osc Summation Index + 2025.40

Plunge Protection Team Indicator -0.23, an “OFF” signal

DJIA 10 Day Advance/Decline Indicator -185.6 on a Sell

NYSE New Highs 71 New Lows 211 (Hindenburg Yes)

Today’s Technology NDX Market Comments:

The NDX Short-term key Trend-finder Indicators generated a Sell signal Wednesday, May 29th, 2019, and remain there May 29th, 2019. The NDX Purchasing Power Indicator generated a Sell on May 20th, 2019, the NDX 14 Day Stochastic triggered a Sell signal on May 29th, 2019 and the 30 Day Stochastic triggered a Sell signal on April 17th. 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 an Enter Short positions signal Tuesday, May 7th and remains there May 29th.

On Wednesday May 29th, Demand Power fell 3 to + 395, while Supply Pressure rose 1 to 448, telling us Wednesday’s decline was moderate.

The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal May 8th, 2019, and needs to rise above positive + 5.0 for a new Buy.  It fell to negative  – 12.4 on Wednesday, May 29th.

NDX PPI Fell 4 to + 148.94, On a Sell

NDX 30 Day Stochastic Fast 8.54 Slow 19.51 On a Sell

NDX 14 Day Stochastic Fast 10.71 Slow 21.19 On a Sell

NDX 10 Day Advance/Decline Line Indicator -12.4 On a Sell

NDX Demand Power Fell 3 to 395, Supply Pressure Up 1 to 448 Sell

RUT PPI Fell 4 to + 117.71, on a Sell


RUT 10 Day Advance/Decline Line Indicator – 309.4, On a Sell
Today’s Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a 
Sell signal April 18th, 2019.


HUI PPI Flat at 172.55 on a
 Sell


HUI 30 Day Stochastic Fast 20.00, Slow 11.67 on a Sell


HUI Demand Power Flat at 377; Supply Pressure Fell 2 to 417, Sell

Best regards,

Bob McHugh, Ph.D.