Professor’s Comments Before the Open 1/13/2022

Posted by OMS  at January 14th, 2022

Yesterday’s decline on the Dow and S&P, while producing a nice profitable trading day, never really developed the legs I expected.  The Russell (IWM) looked like it would test and break below the 212 level, but it never did. So, it’s possible that yesterday’s decline was only a minor sub-wave within the middle wave of an a-b-c move.  If this is the case, the Dow could rally to the 36,650 level in the next day or so to complete sub-wave ‘c’ up within wave ‘b’ up before falling to the 35,000 level to complete wave ‘c’ down of Wave ‘D’ down.

Same for the S&P.  It could rally to the 4,760 level before declining to 4,570 to complete Wave ‘D’ down.

I don’t expect much of a rally in the RUT, but it could pop with its sister indexes if they decide to move higher.  As long as IWM stays above 212, where neckline support from the H&S pattern comes in, a small rally to 218 is still possible.  

Yeah, I know all the above sounds confusing, but if the Dow doesn’t decline early today, it’s likely that a rally back to the 36,600+ level is in the cards before the Dow turns negative again.  The rally could wipe out all of yesterday’s nice gains.

Just a heads up.  Not sure if the rally will happen, but if the Arrows start to turn Green, this is what could happen.

h

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The Hockey Stick Pattern
The Creation of Waves and Trends
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