Professor’s Comments April 28, 2020
Posted by OMS at April 28th, 2020
The markets rallied again yesterday but stayed below the key 17 April high of 24,264 keeping the corrective wave 2 scenario intact. The Dow finished with a gain of 359 points, closing at 24,134. The NASDAQ and SPX were up 232 and 41 points, respectively. Volume on the NYSE was moderate, coming in at 99 percent of its 10-day moving average. There were 31 new highs and 9 new lows.
For the past 10 days, the Dow has basically traded sideways with large daily up-down moves. If the Dow stays below 24,264, I MUST continue to label the recent rally as wave 2 up within Major Wave C down. However, if 24,264 is exceeded, all negative bets are off for the next week or so. It would mean that Major Wave B up is NOT complete, and the recent sideways pattern is likely a triangle that would project a move toward the 25,000 level. Then once Major Wave B up completes, another crash wave (Major Wave C down) should begin. This wave should take the Dow trade back down to the 17,000-18,000 level, with 12,000 to 13,000 possible if Major Wave C down extends.
Yesterday’s rally was led by small and micro-cap issues. At this point, the NASDAQ appears slightly stronger than the Dow. The pattern on the NASDAQ appears to need a small rally to about the 9,050-9,150 level before it completes. A break below the 21 April low of 8,360 would tend to confirm the retracement rally is complete.
The Market Timing Indicators for the Major Indexes remain Positive.
The Dean’s List and The Tide also remain Positive.
With positive indicators on the cockpit, an unclear wave pattern that could turn into a triangle, it’s still possible that the markets could make one more rally. This is still not the time to be aggressive on the short side.
The Sector Ration strengthened to 11-13 Negative after yesterday’s session. This was a big change from Friday’s Ratio and could mean that something positive is brewing beneath the surface. It will definitely be something to watch during the next few days. The Strongest Sectors were Material, Healthcare, Utilities, PharmaBio and Household Products. The Weakest Sectors were Media, Transportation, Banks, Financials, and Autos.
Gold and the miners pulled back slightly again yesterday, but my VTI indicator remains in the Trend Mode. Yesterday’s pullback cause the 2-period RSI on GLD to fall to slightly oversold reading of 34.99. If gold continues to pullback, I’ll look to add a few shares of Randgold (GOLD) to my portfolio and a ‘trial’ position for the Model. My target for gold (the metal) remains at 1,900 per oz. This assumes that gold is now in wave 3 of Wave 5 up.
There were NO CHANGES to the Model after yesterday’s session. The Model continues to hold 750 shares of DXD, 800 shares of TWM, 1,600 shares of QID, 40 shares of UCO, and 600 shares of TBT, with a cash balance of $30.282.
Bottom Line: As long as the Dow stays below 24,264, the next crash wave could start at any time. If 24,264 is broken to the upside, the Dow will likely trade to the 25,000 level before Major Wave C down begins. Protect yourself!
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
04-28-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 23 Apr 2020 |
NASDAQ | POS | 23 Apr 2020 |
GOLD | POS | 22 Apr 2020 |
U.S. DOLLAR | POS | 20 Apr 2020 |
BONDS | NEU | 06 Apr 2020 |
CRUDE OIL | NEG | 24 Feb 2020 |
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