Professor’s Comments March 6, 2018
Posted by OMS at March 6th, 2018
The markets fell early, then rallied hard from oversold conditions. The Dow finished 337 points higher to close at 24,875. It was down 152 points early in the session. Talk about volatility! The NASDAQ and SPX finished up 73 and 29 points, respectively. Volume on the NYSE was moderate, coming in at 97 percent of its 10-day average. There were 47 new highs and 41 new lows.
Yesterday’s decline and late rally appeared to be associated with Wave ‘c’ of a large triangle that could be developing for Wave 4 down. The rally could have been sub-wave ‘b’ up of ‘c’ down. If this is the case, the Dow should continue to rise to about the 25,250 level before falling back to re-test 24,000 before waves ‘c’ completes. On the other hand, IF Wave ‘c’ down completed early yesterday, and yesterday’s late move was the beginning of wave ‘d’ up, the Dow could rise to the 25,700 level before pulling back. Right now, there is no way to tell if wave ‘c’ down is complete. However, because of all the up-down-up action we’ve been seeing, the odds are starting to favor the Bullish Triangle Scenario. But even in this best case Scenario, there will still likely be several large volatile moves as the final waves of the triangle unfold.
A significant break of the 24,000 level would likely mean that Wave 3 down in the Bearish Scenario is occurring.
In my WSR, I talked about how I planned to scalp trade the triangle. And that’s what I did yesterday. With the Dow down 150 points early, and approaching the 24,400 level, I was watching stocks in the Semiconductor, Computer, and Healthcare Sectors. I figured if the market was going to turn around and rally, stocks in these sectors would lead the way higher. They did. Intel (INTC) finished the day up 0.77 points, or up 1.71 points from its low. MSFT was up 0.59 cents and up 1.36 points from its low. Apple(AAPL) finished up 0.61 points and up 2.30 points from its low. And Cardinal Healthcare (CAH) finished up 1.46 points, or 1.78 points from its low.
It was a great day to scalp!! All I did was trade strong stocks from the strongest sectors. I exited all trades by the close. That’s what I do when I trade triangles. I use the shorter-term bars, trade smaller positions, take profits quickly, and NEVER hold these positions overnight. I don’t want to worry if the next leg of the developing triangle will go against me the following day.
The Sector Ratio increased to 20-4 positive after yesterday’s session. Semiconductors, Computers, Technology, Healthcare, and Banks were the strongest sectors. Energy and Material were close behind. The Weakest Sectors continue to be the Autos, Transportation, Real Estate, and Media. If you’re in any of the weak sectors, expect your stocks to get pounded if the market decides to start another leg down in the triangle, even worse IF the Dow starts to break below 24,000.
Continue to trade stocks and ETFs in the Strong Sectors and avoid the weak ones..
Gold and mining stocks were relatively flat again yesterday. GLD fell another 0.21 cents to 125.18. My VTI-volume indicator on GLD moved to a Sell Signal after yesterday’s session. This tells me that Wave 2 down on gold might not be complete. I plan to avoid the metal for now, but will continue to watch for a signal change.
Watching and scalping,
That’s what I’m doing,
h
Market Signals for
03-06-2018
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | POS |
VTI | NEG |
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