Professor’s Comments December 13, 2022
Posted by OMS at December 13th, 2022
There is no change to my short-term forecast after yesterday’s 500-point Dow rally.
Stocks continue to trace out a five wave decline from the 1 December high. Yesterday’s rally was a wave 4 up within the pattern. Once this wave completes, wave 5 down will draw prices below last Wednesday’s wave 3 low of 33,418 to complete the first set of down waves.
The patterns are similar on the S&P and NASDAQ, still suggestion fourth wave rallies. The next wave down on the S&P should drop prices below 3,918, the 6 December low. A break below 3,859 now will eliminate all alternate waves counts, which call for slightly higher prices before the major declines begin.
Strangely, new lows rose sharply on yesterday’s rally to 90, from Friday’s 63. The number of new lows outpaced the number of new highs by almost 2:1, which is something one would not expect to see during a 500 point Dow rally. It makes yesterday’s rise very suspect. Coincidentally, yesterday’s rally occurred immediately after a comment made by Treasury Secretary Janet Yellen that she expects to see a reduction in inflation during 2023, and Ms. Yellen knows…right? Hmm? Last time I checked, eggs were still over 6 bucks a dozen.
Anyhow, we should know more about inflation today as the Consumer Price Index is due out later today. Also, the Fed begins its FMOC meeting today with an announcement scheduled for tomorrow at 2pm. As I mentioned in the WSR, I believe a 50-basis point increase in rates will put interest rates right where the Bond market expects rates to be, so we’ll probably see more movement from the CPI data than anything else.
One thing to watch during today’s announcement is the impact of the depletion of the U.S. strategic petroleum reserve had on prices. As most of you know the Administration released a massive amount of petroleum from the U.S. reserve just prior to the elections to soften excessively high inflation (and gasoline prices). The effect also narrowed the U.S. trade deficit given the largely unadvertised exports of crude oil which temporarily boosted 3Q GDP. So now, with the election over, we should start to see these numbers begin to normalize. They may not be pretty. We’ll see. BTW, year to year CPI inflation rates are still running at 42 year highs…75 year highs if you calculate inflation the way it was done back in the 80s.
The Sector Ration weakened slightly top 20-4 positive after Monday’s session. The top five strong sectors were Cap Goods (6), Household Products (4), Leisure (4), Media (4) AND Semiconductors (4). The top four weak sectors were Banks (-1), Energy (0), Telecoms (0), and Retail (0).
I didn’t trade yesterday. I’m on the sidelines waiting to see what the government has to say about inflation.
That’s what I’m doing,
h
Market Signals for
12-13-2022
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 04 Nov 2022 |
NASDAQ | NEU | 30 Nov 2022 |
GOLD | POS | 22 Nov 2022 |
U.S. DOLLAR | NEG | 14 Nov 2022 |
BONDS | POS | 16 Nov 2022 |
CRUDE OIL | NEU | 01 Dec 2022 |
CRYPTO | NEG | 10 Nov 2022 |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments