Professor’s Comments April 30, 2020
Posted by OMS at April 30th, 2020
The markets rallied again yesterday breaking out of the sideways triangle pattern that has been developing for the past two weeks. The Dow finished with a gain of 532 points, closing at 24,634. The NASDAQ and SPX were up 307 and 76 points, respectively. Volume on the NYSE was heavy, coming in at 122 percent of its 10-day moving average. There were 24 new highs and 4 new lows.
The Commerce Department reported yesterday that U.S economy shrank 4.8 percent in Q1 of 2020, the steepest drop since 2008. Personal consumption dropped 7.6 percent, the worst since 1980. Unemployment increased to 26 million as most small business closed their doors. Small businesses are the heart and soul of the American economy. With so many closed, the U.S GDP will likely fall by as much as 30-35 percent when the numbers for Q2 are released.
With the Dow moving above the 17 April high of 24,264, it’s likely that final wave C of Major Wave B up is no underway. Wave C up will likely be a five wave sequence that will carry the Dow to or slightly above the 25,000 level before it completes. Once this wave terminates, the Dow should fall to new lows. I expect Wave C down to be another crash wave like Major Wave A down, with the Dow trading under the 17,000 level, possibly lower.
Yesterday’s rally strong across the board with several of the typically ‘Bullish’ sectors leading the way higher. At this point, from a technical perspective, the patterns on the Dow, NASDAQ and SPX satisfy the requirements of a five wave rally sequence, so the next wave down could start at any time. However, given the impulsive look of the rally for the past four days, I must think that the current rally has a bit more to go. As I mentioned a few days ago, the pattern on the NASDAQ appears to need a small rally to about the 9,050-9,150 level before it completes. Yesterday the NASDAQ closed at 8,9145. 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, and a wave pattern that appears to be wave 5 up after a wave 4 sideways triangle, it’s likely the markets are in the final wave of their Major Wave B up retracement rally. This is still not the time to be aggressive on the short side.
The Sector Ration strengthened to 14-10 Positive after yesterday’s session. The Strongest Sectors were Material (includes gold), PharmaBio, Service, Semiconductors, and Household Products. The Weakest Sectors were Media, Autos, Insurance, Banks, and Financials.
Gold and the miners pulled back slightly again yesterday, but my VTI indicator on GLD remains in the Trend Mode. I used the pullback to buy a major position in GOLD for my personal account. As I mentioned yesterday, with GOLD in the Trend Mode and the 2-period RSI showing oversold conditions, it was the time for a Rifle Trade. I simply used my new Scalp Trading indicators to enter the trade. The shares were purchased as a Position Trade, so I will hold the shares as long as the timing indicators remain in the trend mode. My target for gold (the metal) remains at 1,900 per oz. I’m assuming that gold is now in wave 3 of Wave 5 up.
Crude Oil rose 2.72. My market timing indicators on crude remain negative.
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, 600 shares of TBT, and 500 shares of GOLD with a cash balance of $17,067.
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
04-30-2020
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 | NEU | 28 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