Professor’s Comments June 24, 2021
Posted by OMS at June 24th, 2021
Not much changed after yesterday’s session. The Dow rose a handful of points early, then traded sideways for most of the day before pulling back into the close. It finished with a loss of 71 points. The NASDAQ was up 18 points; the S^P was down 5 points. Volume on the NYSE was low, coming in at 83 percent of its 10-day average. There were 177 new highs and 10 new lows.
Yesterday’s low volume day produced a small change in the A-D oscillator, so we need to be on the lookout for a Big Move within the next 1-2 days.
The recent rally we’ve seen since the Dow made its wave 1 low on 18 June appears to be associated with an a-b-c rally for retracement wave 2 up. Because the markets basically traded flat yesterday, that rally might have one more leg up to go before they start down in earnest. The NASDAQ and S&P continues to look like they are in the final fifth wave of a Rising Wedge or Ending Diagonal that started in early May. This means that once complete, the 12 May low should be their initial target.
I still believe that any rallies now should be viewed as shorting opportunities. My downside target for the Dow, once retracement wave 2 up completes, remains near the 32,000 level. My short-term target for the S&P remains near the 4,110 to 4,117 level.
The Market Timing Indicators on the Dow and S&P remain Negative. The Timing Indicators on the NASDAQ remain Positive.
The Scalp Trading Indicators for the Dow (DIA) turned Negative on 15 June and remain Negative. The same indicators on the S&P (SPY) are Neutral. The ST indicators on the NASDAQ-100 (QQQ) remain Positive.
The Dean’s List remains Neutral. The Tide remains Negative.
The Sector Ratio remained at 12-12 Neutral after yesterday’s session. The top 5 strong sectors were Energy with an RS rating of 4, PharmaBio (3), Service (2), Energy (2), Retail (1) and Leisure (0). The top five weak sectors were Banks (-3) Transportation (-2) Consumer Products (-2), Foods (-2) and Telecoms (-1). Continue to watch for increasing weakness in the Sector Ratio as the week progresses.
Model Update: There were NO Changes to the Model. It remains 100 percent in cash.
Top Stocks: Three D Systems (DDD) was the Top Stock on Tuesday’s Member’s Watch List at 36.87. Yesterday, the stock gained another 1.17 points after gaining 7.99 points on Tuesday. Workhorse (WKHS) the #2 stock was up 1.37 points yesterday. Nvidia (NVDA) at the #3 position gained 6.82 points. So even thought the market traded flat to slightly down yesterday, the Top Three Stocks finished positive on the day. Workhorse (WKHS) was probably the easiest of the top stocks to trade as it opened slightly lower yesterday, then turned around and went into the trend mode staying positive all day. Tesla (TSLA) is back on the MWL near mid-pack, and usually when TSLA has a good day, like the one it had yesterday when it gained almost 33 points, the EV group which includes WKHS, usually has a nice day. BTW, the ST indicators on TSLA have turned positive, so the stock could continue to rally a bit more in what appears to be wave 2 up within Wave 3 down.
Gold: Gold (GLD) fell 11 cents to 166.14 yesterday and remains on negative indicators. GLD remains above its lower trend line support, so it’s possible that a rally could start from current levels.
At this point, it’s hard to tell if gold (the metal) completed an a-b-c decline on 18 June at the 1,761 level or if the decline was only wave 3 down with wave 5 down still to come. Because of this, I’m still being cautious with gold now, mainly because IF trend line support does not hold, gold could begin a serious wave 5 decline. I continue to avoid gold until I see a change in the indicators.
BTW, for those students who trade cryptocurrencies, it appears that Bitcoin could have completed a wave 5 down with yesterday’s low of 28,824. If I’m correct about this, Bitcoin could rally back to the 41,000+ level initially, and potentially to the 49,000 level. On the other hand, if Bitcoin fails to hold yesterday’s low, all bullish projections are off as a decline below 28,824 would indicate the impulse pattern is not complete. If this happens, it could decline to the 24,000 level. Only two months ago, Bitcoin was trading at 64,858 and on the cover of Time and Newsweek magazines. Yesterday it closed at 32,777. Wow!
Bonds: TMF fell slightly yesterday (-0.16 points) and still looks to have completed its wave 4 counter trend rally from the 18 March low. If I’m right about this, Bonds should begin to fall in the weeks ahead, as interest rates rise. The next wave down in Bond prices should re-test the 18 March lows.
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
06-24-2021
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 15 Jun 2021 |
NASDAQ | POS | 07 Jun 2021 |
GOLD | NEG | 08 Jun 2021 |
U.S. DOLLAR | POS | 16 Jun 2021 |
BONDS | POS | 17 Jun 2021 |
CRUDE OIL | POS | 21 Jun 2021 |
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