Professor’s Comments October 4, 2022
Posted by OMS at October 4th, 2022
In the WSR, after I discussed the intermediate term scenarios for the markets (lower prices), I said that it was possible that that Dow could rally early this week for sub-wave 4 up and then decline later in the week to complete sub-wave 5 down into 6-7 October. So, the Dow rallied hard yesterday, but after looking at the charts, the rally was probably NOT sub-wave 4 up. There was too much upside for that. So, the rally was likely a wave ‘C’ up in an a-b-c pattern for a sub-wave 2 up. If this is the case, the Dow should continue to rally to slightly above the 29,813 level, which is the 28 September wave ‘A’ high. There’s also a gap at 30,076 from 22 September, which is another possible target. As I’ve said many times before, Bear market rallies can be quick and painful if you’re on the wrong side of them. But the nice part of them is that they give us another opportunity to get short before the next down leg of the Bear resumes. That’s what I’ll be doing today. Looking to buy inverse ETFs, like SDOW, SQQQ, and TZA.
Yesterday’s rally was accomplished on very light volume and a ton of short-covering. This is another reason I believe it was part of a 3-3-5 flat pattern for sub-wave 2 up. Once the current rally completes, there should still be a series of wave 3 declines to come. The current rally is correcting the 1,800 point sub-wave 1 decline from 21 September.
BTW, the current sub-wave 2 rally should form the ‘Blade’ of my Hockey Stick Pattern, something I also discussed in the WSR. In Bear markets, whenever I see a retracement rally occur, I think about buying a few short term Put options. I still believe the 18 November DIA Put with a 260 strike will be a winner, but depending on how things go today, I might pay the additional time premium for the 18 December contract with the same strike.
If you’re risk adverse, and don’t fully understand options trading, don’t do them. You’re probably better off with just sticking to the inverse index ETFs from the Dean’s List.
When I looked at the Lists yesterday, I noticed that several silver and gold ETFs are starting to appear. As you know, I’m watching he metal very closely now, and even traded a few shares of UGL yesterday on the 4- min bars. I got out after a nice short-term profit, mostly because the Market Timing Signal for gold is still neutral. I’m still considering the metals as a TRADE ONLY, at this point, because the pattern only suggests a short-term rally. However, having said this, the rally could be a nice one as my target for gold still is slightly above the 1,800 level. Yesterday, even with its 35 point rally, gold closed near 1,700.
The Dean’s List and The Tide are still negative.
The Market Timing Indicators on all the major indexes are still negative.
Somewhat surprising…. yesterday’s rally did not produce a change in the Sector Ratio. It’s still at 0-24 negative after Monday’s session. There were no strong sectors. The top five weak sectors are Consumer Products (-7), Media (-7), Semiconductors (-5), Household Products (-5) and Transportation (-5).
Continue to focus on inverse index ETFs from the Dean’s List, especially once the bounce completes. Pay close attention if the Dow approaches the 29,813 to 30,076 levels.
That’s what I’m doing,
h
P.S. I noticed that Dave sent out the email announcing Thursday’s combo Update Class -Class About Nothing. If for some reason you did not receive the email and want to attend the Class, just send Dave an email at support@themarket101.com to request it. He’ll take care of the rest.
I started working on the Class last night and have some good stuff to present. It won’t be like a lot of the crap that you get fin your mailbox from stock ‘experts’ that want to sell you something. They ‘hook’ you with an idea on the market or some stock, then make you sit through a painfully long presentation which usually asks you to sign up for some expensive newsletter. No, I don’t do that. I get right to the point. I’m going to spend the first 15-20 minutes showing you how I believe the Bear Market will unfold. Then I’ll give you my near and longer term targets for equities, bonds, the metals, and how I plan to trade them. I think you will find the discussion extremely interesting. Then once I complete my part, I’ll open it up for your questions. This is the part that students tell me they like best. We can talk about anything you want, as long as it’s not related to golf or sex. To be honest, I’m making a ton of money these days trading my Arrows system. Many of you have asked me to do more of these Update Classes, so you can talk to me, get a better understanding about what I do, and share in my success. So, here’s your chance. I’m really looking forward to seeing you.
Remember, pay attention to the 29,813 to 30,076 levels today.
Market Signals for
10-04-2022
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 15 Sep 2022 |
NASDAQ | NEG | 15 Sep 2022 |
GOLD | NEU | 30 Sep 2022 |
U.S. DOLLAR | NEU | 03 Oct 2022 |
BONDS | NEG | 11 Aug 2022 |
CRUDE OIL | NEG | 15 Sep 2022 |
CRYPTO | NEU | 03 Oct 2022 |
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