Professor’s Comments June 2, 2022
Posted by OMS at June 2nd, 2022
The major indexes declined yesterday on relatively light volume. The move appeared to be a continuation of Friday’s pullback, which from a wave count perspective, still appears to be a sub-wave 4 within Wave 2 up. Once sub-wave 4 completes, wave 5 up should carry the major indexes to the targets I mentioned in yesterday’s Comments. For the Dow, I’m still thinking that Wave 2 up will complete somewhere between 33,500 and 33,600+ level. It could even approach 34,000 on a rare 78.6 percent retracement, although a move this large would be a stretch. Students should remember that the current rally is still a retracement rally within a larger Wave 3 decline. Once the rally completes, the Dow should fall 3,500 to 5,500 points, so students should be thinking about the larger picture now, and not worrying so much about the current retracement rally.
There were no changes to my short-term indicators after yesterday’s session.
The Dean’s List and The Tide remain positive.
The Market Timing Indicators on the Dow remain neutral. The Scalp Trading Indicators on the Dow, S&P (SPY), NASDAQ (QQQ) and RUT remain positive. However, the Bias indicator on the daily charts of all four indexes is still negative. This means the current rally is likely a retracement rally. I’m still thinking the rally could last into 7 June +/-, mostly because of a weak Fibonacci number that focuses on that date. The market doesn’t have to turn on 7 June, but at this point, it appears to have a better than average probability.
The Sector Ratio weakened to 11-13 negative after Wednesday’s session. The top five strong sectors are Telecoms (12), Energy (7), Utilities (4), Cap Goods (2) and Leisure (2). The top five weak sectors are Retail (-5), Media (-3), Food Drug (-3), Healthcare (-3) and Service (-2). Avoid all weak sectors as they will likely lead the market lower during wave 3 of Wave 3 down.
No change in my comments on Bonds, crypto, or gold. I don’t see any reason to own them now. Gold still looks like it wants to move another 1,500 to 2,000 points lower before it completes wave ‘C’ of Wave 2 down. This would put gold near the 1,650 level.
West Texas Crude appears to be breaking out of a 3 month triangle for Wave 4. If I’m right about this, crude oil prices could be headed substantially higher. Yesterday crude closed at 115 a bbl. Chart suggests it could hit 150 to 160, possibly higher. BTW, this is not a like a Cathie Woods prediction where she said Bitcoin could reach $1 Million a coin. Really Cathie? Based on what? No, I’m not making any predictions for Crude Oil. I’m just telling ya what the chart is telling me now. Get ready for even higher prices into the fall.
Best Bets: I continue to believe the best bets for scalping during the next few days will be the positive index ETFs. If a Green Arrow appears at today’s opening, I’ll look to buy a few shares of UDOW, TQQQ, and TNA. If the indexes move toward my upside targets, I’ll start looking to set up a few longer-term short positions. But not now. The current wave 4 pattern appears to be a small triangle, which is almost always a continuation move. In this case, it suggests higher prices. So be patient and wait for Wave 2 up to complete. There will be plenty of time to short the market in a week or so.
BTW, my upside target for the RUT is now near the 1940 to 1950 level. This would put IWM closer to the 192-193 level. If IWM makes a 61.8 retracement, it could approach the 195 level. Yesterday, IWM closed at 184.26, almost 10 points from my projected target. It’s the reason I will be focusing on TNA today :>)
That’s what I’m doing,
h
Market Signals for
06-02-2022
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 24 May 2022 |
NASDAQ | NEU | 27 May 2022 |
GOLD | NEU | 19 May 2022 |
U.S. DOLLAR | NEU | 19 May 2022 |
BONDS | NEU | 19 May 2022 |
CRUDE OIL | POS | 12 May 2022 |
CRYPTO | NEG | 21 Apr 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