Professor’s Comments March 15, 2022
Posted by OMS at March 15th, 2022
Stocks tried to rally early yesterday but gave in to selling pressure by day’s end. The Dow ended the day flat, down 1 point at 32,946. The weaker NASDAQ lost 253 points; the S&P finished down 32 points. Volume on the NYSE was moderate, coming in at 92 percent of its 10-day average. Seventy-three percent of yesterday’s volume was to the down side. There were 32 new highs and 742 new lows. Students should note how the number of new lows is swamping the number of new highs now as the Bear Market gets underway.
The Fed will begin its meeting today on interest rate policy with an announcement scheduled for 2pm tomorrow. It is widely expected to raise rates by as much as one-half basis point. There will likely be a lot of volatility AFTER the announcement.
While the Fed meets, several other things are happening around the world. Last week I talked about how the Russian Stock Market was crashing because of its invasion of Ukraine. This war is starting to impact the markets of other countries in Europe and Asia as Russia is now asking the Chinese for assistance. Hong Kong’s HSI got absolutely crushed during the past two days, dropping over 1,600 points. Several European countries have given up all the gains made during the past few years in the past few weeks. With international trade and markets interconnected as they are today, what impacts one market tends to spill over into other markets very quickly. The impact is starting to be felt here in the U.S.
There are a few other technical issues with the market that students should be aware of. Last night, the 50-day moving average on the S&P crossed below the 200, joining the Dow and the NASDAQ-100. This ‘Death Cross’ as it’s known, is significant to most institutional money managers. They will no longer be looking to buy stocks aggressively, tending to chose only those stocks with 50s above the 200. This means that those stocks with 50s below the 200 will no longer have institutional support. So, odds are that any stock you are holding now with its 50 below its 200 is extremely vulnerable to a significant decline.
Also, yesterday the Dow generated a Shooting Star Pattern. Shooting Stars are reversal patterns typically seen at the end of a rally. In my WSR, I outlined a scenario going into the Wednesday’s Fed announcement that was flat to slightly positive. But in the current environment, and especially after watching yesterday’s weak market action, it is possible that sub-wave ‘c’ up of Wave 2 up could have completed with yesterday’s early rally. Now, a potential rally to 34,000+ has become my alternate scenario. However, I should mention that this scenario has two possibilities. Because the Dow has developed a small triangle since 8 March, it is still possible for the index to rally to the 33,700 level before falling. I don’t give this scenario high odds, but it is possible. It’s also possible for the Dow to stage a rally to the 34,200 level if I extend the origin of the triangle into the previous week. Again, I believe the odds for this are low, but it could happen. I want you to know this just in case the Fed does something unexpected with interest rates tomorrow. Things could get crazy!
On the other hand, a break of the 32,588 level now will suggest that wave 2 up has ended and wave 3 down of Wave 3 down is underway.
My short-term targets once wave 3 down is underway are:
Dow: 29,700- 30,200, S&P: 3,800, then 3,600. NASDAQ: 11,500 -11,750.
Please take all necessary precautions to protect yourself.
After Monday’s action, the Dean’s List and The Tide are negative.
The Market Timing Indicators for the Dow, S&P, and NASDAQ remain negative
The Scalp Trading Indicators for the Dow, S&P, and NASDAQ are also negative.
The Sector Ratio strengthened to 9-15 negative after Monday’s session. The top five strong sectors were Energy (8), Banks (3), Material (3), Food Drugs (2), and Cap Goods (2). The top five weak sectors were Household Products (-7), Semiconductors (-6), Consumer Products (-5), Autos (-4) and Technology (-3).
My Doctor’s Trade in TZA gained 2 points to 37.85 yesterday after generating a Green Arrow/green bar on Friday. Pay attention the color of the bar after Wednesday’s Fed announcement. If it stays green on TZA, I believe we could see IWM trade down to 183 or lower in the weeks ahead.
Cryptos: GBTC dropped 0.11 cents yesterday to 25.4 after moving back to a Sell Signal. I’m not sure what will happen to the cryptos in this environment, but with them on a Sell Signal, I’m avoiding them for now. Same for gold….
Gold: Gold continues to pull back after generating a Red Arrow on its 4-hour chart. The pullback appears to be forming the Blade’ of a Hockey Stock which suggest higher prices. The bias indicator on GLD remains positive but continues to decrease. If a Green Bar/Green Arrow appears later in the week, I’m a buyer.
That’s what I’m doing,
h
Market Signals for
03-15-2022
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 11 Feb 2022 |
NASDAQ | NEG | 03 Mar 2022 |
GOLD | POS | 25 Feb 2022 |
U.S. DOLLAR | POS | 18 Feb 2022 |
BONDS | POS | 07 Mar 2022 |
CRUDE OIL | POS | 01 Mar 2022 |
CRYPTO | NEG | 10 Mar 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