Professor’s Comments January 23, 2020
Posted by OMS at January 23rd, 2020
Not much changed from Wednesday’s Update.
The Dow rose almost 130 points early and then pulled back to finish with a small loss of 10 points, closing at 29,186. The NASDAQ and SPX were up 13 and 1 point, respectively. Volume on the NYSE was moderate, coming in at 101 percent of its 10-day moving average. There were 309 new highs and 29 new lows.
Yesterday’s early rally did not exceed last Friday’s high of 29,373, so it’s still possible that the rally was part of a wave 2 retracement. If it was not, then it was likely part of a small wave 4 and if this is the case, the Dow could make one test of the 29,373 level before it begins to fall. With either wave count, I believe the markets are developing a Major top, and that top is close at hand.
Students should continue to watch for a move below the 29,050 level, as a decline below this level would increase the odds that the Dow has topped. A change in the market timing signals would confirm that the top is in, especially IF the decline that caused the signal change was impulsive.
Market sentiment remains at EXTREME levels. The Put/Call Ratio on the CBOE is now at its lowest level in over six years. Last week, investors bought 22.8 million call options, a 20 year record! History shows us that whenever so many investors are betting the market will continue to move up, its usually time to take the opposite side of the trade.
All I’m doing now is waiting for the market to roll over.
The Dow, SPY, NASDAQ, and Russell 2K remain on Buy Signals. The Dean’s List remains Positive. The Tide remains neutral with 3 of the 4 breadth indicators being negative.
The Sector Ratio remained at 19-5 Positive after yesterday’s session. The Strong Sector List was led by Healthcare, Media, Household Products, Semiconductors, and PharmaBio. The Weak Sector List was led by Energy, Autos, Banks, Service and Material.
Model Portfolio: There were NO CHANGES to the Model after Wednesday’s session. The Model continues to hold 400 shares of TZA, 300 shares of VXX, 1,500 shares of DXD, 300 shares of SQQQ and 500 shares of TMF with a cash balance of $57,890. The Model is currently up 27.7 percent. The Model remains well positioned to take advantage of the decline that the sentiment, volume, and breadth indicators are predicting.
That’s what I’m doing.
h
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
Market Signals for
01-23-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 11 Dec 2019 |
NASDAQ | POS | 12 Dec 2019 |
GOLD | POS | 17 Jan 2020 |
U.S. DOLLAR | NEU | 08 Jan 2020 |
BONDS | POS | 22 Jan 2020 |
CRUDE OIL | NEG | 10 Jan 2020 |
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