Professor’s Comments February 23, 2023
Posted by OMS at February 23rd, 2023
Stocks were mixed yesterday after Tuesday’s large decline. The Dow finished with a loss of 84 points, closing at 33,045. The NASDAQ was up 15 points while the S&P lost 6 points. Volume on the NYSE was moderate, coming in at 98 percent of its 10-day average. There were 32 new highs and 34 new lows. Yesterday was the first time that new lows outnumbered new highs in a while.
Yesterday, the S&P fell to 3,979 which is an important support level provided by its 50-day moving average and a rising trend-line from the October lows. Just below this level is major support provided by the 200-day moving average at 3,940. So, during the next few days, these critical levels are the levels I will be watching. Given that Wave 3 down appears to be starting, if the S&P closes below 3,940, I would expect prices to begin a waterfall decline that takes prices down to or near the 13 October low of 3,491.
On the other hand, after yesterday’s action, I can now count 5 completed waves down. So, it’s possible that sub-wave 1 down of Wave 3 down completed yesterday. If this is the case and support at the 50-day moving average holds, a sub-wave 2 rally could take the S&P back to the 4,080 level before the next series of down waves begins. If this rally happens, I do not expect it will last more than a few days. Also, I would view any rally now as a shorting opportunity.
Again, all the above assumes that the 2 February high is the Wave 2 top on the S&P.
The Dean’s List remains neutral. The Tide is still negative.
The Market Timing Indicators for the Dow are negative. The same indicators for the NASDAQ are still neutral.
The Sector Ratio strengthened to 8-16 negative after Wednesday’s session. The top five strong sectors were Media (2), Banks (1), Leisure (1), Real Estate (1), and Financial (1). The top five weak sectors were PharmaBio (-3), Utilities (2), Energy (-2), Transportation (-1), and Food Drugs (-1). Students should note that the Sector Ratio is now negative…the first time it’s been that way in a while.
My Trades: I only made two trades yesterday, but both were good ones. Both occurred in the early afternoon, near the 13:42 mark. The Green Arrows that initiated the trades on SDOW and TZA are clear. I exited both trades on the Red Arrows. The thing I was looking for on both trades was to have the Bias turn positive. That’s the thing that made both trades successful. So, make sure the Bias is favorable before you place your trades. I like to see the Bias positive and rising.
Bottom Line: The markets appear to have turned, with Wave 3 down now starting. If during the next few days, S&P support at the 3,940 level is broken, Katie bar the door. Otherwise, I would expect more backing and filling to take place with the possibility of a rally back to the 4,080-level possible. If the later happens, I will look to buy inverse ETFs, like SDOW, TZA, SQQQ and SPXU. Follow the Arrows.
That’s what I’m doing,
h
Market Signals for
02-23-2023
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 21 Feb 2023 |
NASDAQ | NEU | 17 Feb 2023 |
GOLD | NEG | 14 Feb 2023 |
U.S. DOLLAR | POS | 15 Feb 2023 |
BONDS | NEG | 09 Feb 2023 |
CRUDE OIL | NEG | 15 Feb 2023 |
CRYPTO | POS | 05 Jan 2023 |
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