Professor’s Comments January 13, 2022
Posted by OMS at January 13th, 2022
Stocks finished slightly higher yesterday after oscillating around their starting point for most of the day. The Dow finished with a gain of 38 points, closing at 36,290. The NASDAQ and S&P were up 35 and 13 points, respectively. Volume on the NYSE was moderate, coming in at 100 percent of its 10-day moving average. There were 128 new highs and 64 new lows.
There was another small change in the A-D Oscillator last night, so we need to be on the lookout for a Big Move within the next 1-2 days. The last Big Move signal produced an intraday move of over 1,000 Dow points, making for a very profitable trading day.
The Dow still appears to be nearing completion of wave ‘c’ up withing Wave ‘D’ down in an Ending Diagonal Pattern. Yesterday’s intraday high of 36,453 retraced 0.62 percent of the decline from the 5 January high, so the retracement rally could be complete. We should know very soon if stocks start an impulsive decline later today. A break below 35,770 will confirm that the decline toward 35,000 is underway. I’m still expecting Wave ‘D’ down to complete somewhere between 34,930 and 35,300. If the pattern is NOT a Wave ‘D’ down, support at the 35,000 level will not hold and the Dow could fall a lot lower.
BTW, if retracement wave ‘c’ up did not complete with yesterday’s rally, the next level of resistance is near the 36,650 level which is the 30 December high.
I have been watching for confirmed Red Arrows to appear on the 60 min bars of DIA and SPY to add to my existing short positions in SDOW and SPXU. That hasn’t happened yet. Maybe today.
TZA, the inverse ETF for the Russell 2K bucked the downtrend with a nice Green Arrow on the shorter-term bars. The scalp trade produced some nice ‘eating cake’ while I waited for the market to roll over. Remember, the Russell is in a completely different pattern than the other major indexes. It appears to be starting a Wave 3 down, so while I’m holding shares of TZA based on the 4-hour chart, I’m also trading all confirmed Green Arrows on TZA as scalps. These short-term scalps are not into the close like their sister shares based on the 4-hour bars. BTW, by closing up 0.66 points, TZA tacked on another few percent putting the ‘Doctor Trade’ up close to 75 percent.
The Dean’s List stayed neutral. The Tide has turned positive.
The Market Timing Indicators for the Dow, NASDAQ, and SPY are neutral.
The Scalp Trading Indicators for the Dow, NASDAQ, and S&P remain negative.
The Sector Ratio weakened to 15-9 positive after Wednesday’s session. The top five strong sectors were Banks (5), Energy (4), Autos (3), Technology (3), and Material (3). The top four weak sectors were Retail (-4), CapGoods (-2), Leisure (-1), Computers (-1), and PharmaBio (-1).
I tried to short the trannies yesterday but couldn’t. TD Ameritrade didn’t have any shares of TPOR, the ETF I wanted to short. Oh well, maybe I’ll look for a weak stock to short in the transportation sector. Haven’t found the one I want to use yet.
GBTC, the ETF for Bitcoin, showed some signs of life yesterday, gaining 0.80 cents on the day to 31.95. If the overall market starts to decline, we could see some money move back into the cryptos. The past few days of trading in the cryptos has me thinking that a significant bottom could be forming. On the other hand, my VTI indicator is still buried in the downtrend mode. That needs to change before I even think of owning a few shares. I never try to catch falling knives.
Pay attention to what the indexes are doing today. With a small change signal on the Board from the A-D oscillator, it could be a good day to trade.
That’s what I’m doing,
h
Doctor’s Trade Update
Students should note that the ‘Doctor’s Trade’ with TZA on the 4-hour bars is currently on an unconfirmed Red Arrow. Both the volume and momentum indicators on the ETF for the inverse RUT ETF remain positive. If a new Green Arrow appears, I’ll add to my shares of TZA.
Also, watch the ‘Safety Valve’. If it goes back above the zero line on the 4-hour bars, I will add a few shares to my existing position.
Remember, the RUT could be starting a major Wave 3 down. TZA is a 3X inverse leveraged ETF for the RUT.
h
Don’t have the Arrows? What can I say other than….Get them!
The above is NOT trading advice. I NEVER make recommendations. I only tell you what I’m doing.
Market Signals for
01-13-2022
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 05 Jan 2022 |
NASDAQ | NEU | 12 Jan 2022 |
GOLD | POS | 11 Jan 2022 |
U.S. DOLLAR | NEG | 12 Jan 2022 |
BONDS | NEG | 03 Jan 2022 |
CRUDE OIL | POS | 23 Dec 2021 |
CRYPTO | NEG | 06 Jan 2022 |
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