Professor’s Comments – Before the Open 1/12/2022

Posted by OMS  at January 12th, 2022

In yesterday’s comments, I said it’s hard to say where wave ‘b’ or wave 2 up will end, but I wouldn’t expect it to move beyond resistance near the 36,300 level. So just before the close, the Dow reached a high of 36,271. 

The entire day was spent forming the final waves of either retracement Wave 2 up or Wave ‘C’ up within Wave ‘D’ down.  It doesn’t really matter which of these wave counts is correct as once the current retracement wave completes, the next major move should be down.  

I’m still using a downside target for the Dow anywhere between 34,930 – 35,300.  Again, this assumes the Dow is in a Wave ‘D’ down.  If current waves are NOT part of ‘D’ down, and the Dow breaks support provided by the lower trend line of the Ending Diagonal near 35,000, it could fall a lot more.

BTW, upside resistance on the SPX is near the 4,730 level.  Yesterday the S&P got as high as 4,714.  My first downside target for the SPX is below the 10 January low of 4,582.

I will be watching for Red Arrows on the shorter-term bars on the major indexes today to establish or add to positions on inverse index ETFs, like TZA, SPXU, and SDOW. Right now, the momentum is starting to diverge negatively on the 15 min bars. I need to see it turn negative and be followed by downside impulsive action in price.

I also added to my PUT position in DIA (22 March 310 strike), just before yesterday’s close. Cost me just over 2 bucks.

TWID,

h

BTW, I receiver a really nice testimonial yesterday from one of my long time subscribers who bought a Consulting Session. I’ll post it tomorrow so you can see what he said. Might make you think about doing something similar for yourself.

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
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