Professor’s Comments – Before the Open 8/27/2021

Posted by OMS  at August 27th, 2021

Trading slowed on Wall Street yesterday as most traders moved to the sidelines waiting for Fed Chairman Jerome Powell to give one of the most important speeches of his career on several policy issues, including whether to dial back monetary policy stimulus, sometimes called “tapering.”  As most of you know, the current market has been on a stimulus high, so IF the Fed even hints of slowing its $80 Billion per month of Bond purchases, it could spell trouble for the markets.

Yesterday’s lack of buying caused the Dow to pull back 192 points to close at 35,213.  The decline was part or all the wave ‘b’ pullback I discussed in Thursday’s Comments.  I had projected a pullback to 35,100; yesterday’s low was 35,205.   So, it got close, enough to satisfy the requirements for a wave ‘b’ retracement.

Here’s the deal:  Whether or not the Dow does pull back to the 35,100 level, students should start looking for signs that the wave ‘c’ rally is starting.  It could be a good one, taking the Dow to a new all-time high, probably close to the 35,700 – 35,800 level.   The rally should be aided by positive end-of month / pre-Holiday bias.   The important level to watch now is 35,100.  If the Dow begins to break below 35,100 AFTER Powell’s speech, there ain’t gonna be a rally!   Wave ‘b’ down should NOT move much below 35,100 if the wave ‘c’ rally is to occur.

Anyhow, this is the time for using the Scalp Trading indicators for either day or position trades.   Yesterday the two Bitcoin miners, MARA, and RIOT, pulled back along with the market.  Neither saw a significant amount of selling, so the Bullish case is still very much alive.  I tried to trade both issues yesterday with little success ($90 bucks on the day).   The indicators on the 15 min bars were negative right from the get-go, and because A-Trade doesn’t have many shares of the miners to lend, I (you) can’t usually short the stock.  So, I stayed on the sidelines.  I put on a small, short in GDX early, but got impatient and sold a few hours later for a tiny profit.   But that was it.

Today, I’ll be back with the miners.  With MARA and RIOT still at the top of the MWL, I MUST consider them my top priority.  BTW, going into yesterday, my ‘new’ arrow based system had been on a Sell Signal from the 2pm period on Wednesday. The arrow turned negative on MARA at the 38.56 level and stayed negative into the close at 36.22.  Pretty impressive.

If the signal turns positive today on either MARA or RIOT, I’m in.

That’s what I’m doing,

h

BTW, I’m only doing day trades now, flattening my positions by the close.  I still believe that the market will top by 10 September +/-, depending on how wave ‘c’ up develops.  Remember, wave ‘c’ up does not have to happen.  It could truncate.  Truncation is always a possibility in a wave 5 of a Wave 5 in a Major Wave 5 of a Bull Market.  Please be careful with your positions.

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.