Professor’s Comments April 18, 2023
Posted by OMS at April 18th, 2023
Stocks traded mostly sideways yesterday before making a late rally into the close. The Dow finished with a gain of 101 points, closing at 33,987. The NASDAQ and S&P were up 34 and 14 points, respectively. Volume on the NYSE was moderate, coming in at 97 percent of its 10-day moving average. There were 74 new highs and 26 new lows.
As the market continues its slow steady climb, the price action still appears to be wave 5 up within a five wave Bearish Rising Wedge or Ending Diagonal. Once this wave completes, probably within the next two weeks, the indexes should fall to levels where the patterns began. On the Dow, this is the 31,429 level. For the S&P, it’s the 13 March low of 3808.86. Yesterday, the S&P closed at 4,151.32.
The reason I’m currently thinking the markets will continue to chop slightly higher into early May is because there is a Fibonacci Cluster Window during that time. Fibonacci Cluster Windows have been significant turning points for the market in the past. This one should be no different.
However, there is no guarantee that the current rally will last into early May. Like I said in the WSR, the indexes have now completed the required five waves for the patterns. They could start to head lower at any time now. One reason I say this is because the wave action on the Dow from Friday’s high of 34,083 appears to be a five wave down, 3 waves up sequence. If the Dow did in fact top on Friday, and the small wave downward pattern are the first of many down waves, the large cap index should start to decline during the next few days. If not, the Dow and its sister indexes will likely chop higher into early May. Under this scenario, the Dow should top near or slightly above the 13 December 2022 Wave ‘A’ high of 34,712.
As of last night, the Market Timing Indicators on the cockpit for the Dow are positive. The same indicators on the NASDAQ are neutral.
The Dean’s List and the Tide remain positive.
The Sector Ratio stayed at 10-14 negative after Monday’s session. The top five strong sectors were Healthcare (2), Telecoms (2), Utilities (1) PharmaBio (1), and Computers (1). The top five weak sectors were Retail (-8), Banks (-2), Consumer Products (-1), Transportation (-1) and Media (-1).
My Trades: I made two small trades in TNA yesterday, one early and one late. The first Green Arrow appeared immediately after the open on the 5-min bars. The Bias was positive, and the price bars were Green, so I went all in at 31.15. The Red Arrow at 10:35 took me out at 31.57. After that, the colors stayed mostly yellow so I stayed on the sidelines until the Green Arrow at 14:15. Because I still wasn’t convinced the market would push higher, I waited until the two blue bars were replaced by several green bars. After the third green bar and a rising Bias, I was convinced that TNA wanted to trend higher, so I bought a few shares. I exited the trade on the Red Arrow at 15:35.
Gold: Gold appears to have topped at last Thursday’s high. I can now count five waves higher from the 28 February low. From a pattern perspective, the rally from last September’s low can now be considered Wave 1 up of a rally that should take gold above the 2,500 level. Yesterday, gold the metal, closed at 1,996. I’m looking for it to pull back to the wave 3 high of 1,950 as a minimum. If this happens, I’ll be looking to buy GLD and other mining stocks for a potential multi-month Wave 3 run-up. But I want to see it complete some type of retracement wave before I do.
BTW, a student who purchased last Thursday’s Class noticed that his price bars had colored dots on them instead of the actual bars turning colors. If you see colored dots on your trading screen, simply remove the check from the ‘Show Plot’ box on the new indicator’s inputs and options box to get the colored bars.
That’s what I’m doing,
h
Market Signals for
04-18-2023
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 31 Mar 2023 |
NASDAQ | NEU | 10 Apr 2023 |
GOLD | NEU | 10 Apr 2023 |
U.S. DOLLAR | NEU | 17 Apr 2023 |
BONDS | NEG | 14 Apr 2023 |
CRUDE OIL | POS | 14 Apr 2023 |
CRYPTO | POS | 13 Mar 2023 |
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