Professor’s Comments October 19, 2021
Posted by OMS at October 19th, 2021
The indexes were mixed yesterday with the Dow down slightly and technology up strong. The Dow finished with a loss of 36 points at 35,258. The S&P and NASDAQ were up 15 and 124 points, respectively. Volume on the NYSE was moderate, coming in at 102 percent of its 10-day moving average. There were 141 new highs and 47 new lows. Once again, there were more stocks that declined on Monday than advanced, making for a negative A/D ratio, a sign of a tiring market. The last time the market had three successive negative breadth days with a rising market was on 12, 13 and 15 August. The following day, 16 August, the Dow topped and started a significant decline. We’ll see if it happens this time.
The patterns on the Dow, S&P, and NASDAQ continue to suggest that Wave 2 up is nearing completion. In my WSR, I discussed how the indexes could use a small pullback before making one more push higher. Yesterday’s small pullback on the Dow could have been that pullback and if so, the Dow could stage a small rally today. I don’t expect any rally to exceed 35,380. If it does, it’s possible that Wave 2 up is developing a more complex double zig-zag pattern. If this happens, the decline from 2 September to 4 October must be labeled as a Wave 4 in a Bull Market, which means the current rally could test or exceed the 16 August high. A decline below last weeks low will eliminate this scenario.
The Market Timing Indicators for the Dow (DIA), and S&P (SPY) are Positive. The Same indicators for the NASDAQ (QQQ) are Neutral.
The Scalp Trading Indicators for the Dow (DIA), S&P (SPY), and NASDAQ (QQQ) are also Positive.
The Dean’s List and The Tide are Positive.
The Sector Ratio weakened slightly to 16-8 Positive after yesterday’s session. The top five strong sectors were Energy (7), Service (3), Autos (2), Banks (2) and Material (32).
The five weakest sectors were PharmaBio (-3), Telecoms (-1), Media (-1), Technology (-1) and Consumer Products (-1).
Model Update: There were NO Changes to the Model. It is still 100 percent in cash.
Top Stocks: The cryptos continue to be where the action is. Our Top Stock, Marathon Digital (MARA) gained 4.53 points yesterday before pulling back to close at 51.45, up 2.56 points. RIOT also had a nice day, gaining 1.95 points on the day. Both stocks showed Green Arrows right from the opening gate confirmed by lots of volume. The race was on. The new Sell Indicator I’ve been using took me out of MARA at 12:15 at 52.85. which made for a 4.41-point profit. The stock finished 1.38 points lower than where the signal was generated. You asked for better exit criteria… now we have it. BTW, RIOT also generated a sell signal with the new indicator at 12.15 taking me out for almost 3 points of profit. Like I’ve been saying, “I’m in MARA (or RIOT, another Bitcoin miner) every time the indicators are positive.” And now with Green Arrows screaming at me, it’s a ‘no brainer’ trade.
BTW, why did I feel that MARA was a ‘no brainer’ trade yesterday? It has to do with confidence. I knew two things prior to making the trade: The first was that because MARA was at the top of the MWL, I knew I was trading one of the strongest stocks on the planet. The second reason was that I knew going in that my new sell signal would take me out of the trade if the stock didn’t perform. Like I always say, trading is about knowledge and discipline, but its also about having confidence in the tools you’re using to get the job done. The new tools, with the arrows, got the job done yesterday. Look for Dave’s email with details on my Update Class next week.
Gold: Gold (GLD) flat lined yesterday, a day after the Timing Indicators for gold turned Neutral. I don’t see any reason to trade gold now, so I’m still on the side lines.
Same for Bonds…. I’m on the side lines.
I’m just trading the crypto miners while I wait for the market to roll over.
That’s what I’m doing.
h
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
Market Signals for
10-19-2021
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 15 Oct 2021 |
NASDAQ | NEU | 14 Oct 2021 |
GOLD | NEU | 15 Oct 2021 |
U.S. DOLLAR | POS | 17 Sep 2021 |
BONDS | NEU | 18 Oct 2021 |
CRUDE OIL | POS | 15 Sep 2021 |
CRYPTO | POS | 04 Oct 2021 |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.
Category: Professor's Comments