Professor’s Comments October 26, 2021
Posted by OMS at October 26th, 2021
The indexes rose yesterday with the Dow gaining 64 points to 35,741. The NASDAQ and S&P were up 159 and 21 points, respectively. Volume on the NYSE was moderate. coming in at 97 percent of its 10-day moving average. There were 212 new highs and 25 new lows.
The Dow (and the other major indexes) are now in sub-wave 5 up of Wave 5 up. This became clear last week when the Market Timing signals for the Dow, S&P and NASDAQ all turned positive after completing a sideways triangle for Wave 4. Triangles are consolidation / corrective patterns where a stock or index rests before moving higher. They are not topping patterns. Prices usually leave a triangle pattern in the same direction they entered the pattern. In this case, the direction is up, which makes the move a Wave 5 up.
My upside price target for Wave 5 up on the Dow is near 36,500. That’s about 750 points from yesterday’s close. The NASDAQ-100 should rise and top close to the 16,100 level. Yesterday, the NASDAQ closed at 15,514 after getting as high as 15,556. The technology heavy index got a big boost from Tesla (TSLA) yesterday after Hertz announced that it would buy 100K of Tesla’s Model 3 electric cars. Tesla gained 115 points on the news, closing at 1,024.86. The company is now priced at over 1 trillion dollars, making it larger than GM, Ford and Chrysler combined. It now becomes the fourth trillion-dollar market cap company, joining Apple, Amazon, and Microsoft.
BTW, a close below 15,000 on the NASDAQ will be a strong sign that the next wave of decline is underway.
I found it interesting that yesterday’s announcement came only months after Hertz escaped bankruptcy. In May of last year, the car rental company announced that it was going into bankruptcy after being hit hard by the Covid19 pandemic. However, a $5.9 billion bailout loan from two large investors saved the day…at least temporarily. Now, Hertz is betting heavily that the pandemic will end soon, as it is moving forward to electrify nearly all of its 500,000 cars and vans. This will be something to watch over the next few months as chip shortages and the lack of charging stations throughout the country will certainly challenge the EV conversion process. In other words, yesterday’s announcement involved a lot of ‘sizzle’. To keep Tesla’s price near 1,0244, people will now need to see a lot more ‘steak’. BTW, the Market Timing indicators on TSLA turned positive on 23 August with TSLA trading at 706. They’re still positive.
The Market Timing Indicators for the Dow (DIA), S&P (SPY), and NASDAQ (QQQ) are Positive.
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 19-5 Positive after yesterday’s session. The top five strong sectors were Energy (9), Service (4), Autos (4), Banks (4), and Semiconductors (3).
The three weak sectors were PharmaBio (-1), Media (-1), Technology 0), Foods (0), and Consumer Products (0).
Model Update: There were NO Changes to the Model. It is still 100 percent in cash.
Top Stocks: Ok, so Tesla got the headlines yesterday. But it was the cryptos that made most of the money. The top stocks from Friday’s MWL were MARA and CVI (both tied with an RS ranking of 11). CVI gained 0.69 cents on the day to 22. MARA gained a whopping 5.23 points to 54.69. Coinbase (COIN), in the #3 position, gained 24.7 points, closing at 325.54. It was only last weekend that I was talking to a neighbor about how fast crypto and Bitcoin was growing and becoming accepted. He didn’t believe me. It was only after I goggled Coinbase on my iPhone to show him the 14 locations in Jacksonville where he could currently buy dozens of crypto currencies, including Bitcoin. Seeing the map changed his mind. If you expand the map and zoom out so you can see the rest of the country, it might change your mind too.
GBTC, the ETF for Bitcoin, was ranked #2 on Friday’s Dean’s List. It gained 2.14 points yesterday, closing at 50.89. Last night, CBTC moved to the top spot on the DL with a RS ranking of 10. ETHE, another crypto currency ETF, moved to the #3 spot with an RS ranking of 9. Besides the cryptos, the Dean’s List continues to be heavily populated with energy companies and ETFs. However, the List is slowly changing as several gold and silver miners are starting to move up the List now that gold has moved to a buy signal.
I’m still not that into the metal miners as much as I am into the crypto miners. This is mostly because the gold chart shows a ton of overhead resistance at the 1,815 level that MUST be overcome before it gold can move higher. However, a move above 1,815 will likely be followed by a run-up to 1,835 where there is even more resistance. Here’s the deal: If gold can move above 1,835 in the days / weeks ahead, it will signal that significantly higher prices are in the cards for the metal. But I don’t see that breakout happening yet.
Same for silver. Silver closed at 24.59 yesterday. The near-term pattern is still somewhat clouded for silver, but it should test the 25 level as a minimum. If it breaks above 25, the next target is near 25.60. The reason I say the pattern on silver is clouded is because the current rally could still be counter trend. Silver will need to break above 28, which is over 3 points from yesterday’s close, before I can confirm that the next impulse wave is underway. There are too many other stronger things on my Lists now for me to trade, like cryptos and energy, to be focusing on silver (or gold) now. I’m going to wait a few days before taking another look.
Today, I’ll be finishing the slides for tomorrow night’s Update Class presentation. I have soooo much to show you and so little time. If you haven’t signed up already, I hope you take the time to do it today. I really believe the new ‘arrows’ together with the other new indicators, will significantly increase your confidence and help you make better Buy/Sell decisions. Here’s something to ask yourself….
Yesterday, when MARA, which was at the top of Friday’s MWL, opened at 51.10, did you pull the trigger and buy? Be honest. The reason I ask was because at 51.10, the stock was 1.64 points above Friday’s close. Not many people would buy MARA at the opening price…even if it was the #1 ranked stock. Most likely, they would have waited for a pullback. But what would have happened IF you saw a BIG GREEN arrow staring you in the face at Monday’s open, especially when you saw other BIG GREEN arrows on the screen and you could see that whenever a green arrow appears, the price moves higher. Would the arrow have given you the confidence to enter the trade? If you did, you would have made almost 4 points of profit before the next Red Arrow took you out. That’s a profit of $2,000 on 500 shares. It’s also why I had Dave raise the cost of the Class to $199 until 8pm tonight. After that, the cost will be $399, no exceptions. So, like I said last weekend, the best thing I can do for you now is to get you to register for the Class. If you want to increase your confidence in making trading decisions…. get the arrows!
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
10-26-2021
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 | POS | 19 Oct 2021 |
GOLD | POS | 15 Oct 2021 |
U.S. DOLLAR | POS | 17 Sep 2021 |
BONDS | NEG | 19 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