Professor’s Comments May 12, 2022
Posted by OMS at May 12th, 2022
Stocks tried to rally early yesterday but once again failed and finished sharply lower. The Dow finished with a loss of 326 points, closing at 31,834. The NASDAQ and S&P were down 373 and 66 points, respectively. Volume on the NYSE was moderate, coming in at 105 percent of its 10-day average. There were only 13 new highs and 784 new lows.
Yesterday’s closing cumulative TICK came in under -80,000. It was the fourth consecutive day with a closing TICK under -50,000. The reason I mention this today is because it’s been a loooong time since I have seen cumulative TICKs like this. And almost without exception, when it happens, it usually leads to more selling in the weeks that follow.
Technology stocks are getting clobbered during this decline. Yesterday, Apple (AAPL) which had been holding up relatively well until recently, got hit hard, shedding 8.01 points to close at 146.5. The stock is now down 19.5 percent from its 3 January high of 182.88. Cathy Wood’s ARKK Fund hit a new low of 36.63, down almost 100 points from last summer’s high of 132.5. So much for technology and FAANG type stocks.
IWM, the ETF I use to trace the Russell 2k blew below my most recent interim target of 178, closing at 170.6. The ETF is still on track for my targets of 150-160. BTW, my Doctor’s Trade in TZA was up another 3.48 points yesterday, closing at 50.16. The trade s now up 12.30 points or 32 percent from its most recent Green Arrow….4 days ago. Now, you know I’m not keeping track, but I believe that puts the trade up well over 220 percent since last November. We have a lot of happy Docs in Jacksonville now ;>)
OK, so what now? The market is deeply oversold now, but it can remain oversold because its in a wave 3 of Wave 3 down. My VTI indicator is currently at -18.5. A reading below -30 is a severe downtrend. The two targets I mentioned for the Dow in last week’s Class About Nothing, 30,500 or 28,500 (if a 1.6 X Wave 1 retracement) are still in play. I don’t see any reason to change them at this point. I played with a few other numbers yesterday based on Fibonacci levels and got 29,800 as another possible target. So, for now I’m going to use downside targets between 30,500 and 28,500. In other words, no change.
My next downside targets for the NASDAQ and S&P are near the 10,600 and 3,820 levels, with potential for even lower prices after that. A 50 percent retracement of the S&Ps earlier wave 5 generates a downside target near 3,500.
Bottom Line: The indexes should continue to work their way lower as the Bear wreaks havoc on this market. There will continue to be sharp rallies along the way, but for now…as long as we’re in wave 3 of wave 3 down, I will be shorting all rallies. I continue to view any rally in this market as a gift.
Yesterday was no exception. I had another triple cigar day by simply shorting the market by buying TZA, SQQQ and SDOW on confirmed Green Arrows on the short-term bars. Yesterday I was using the 3 min bars top scalp. If you have the Arrows, you can look at the 3 min bars on TZA and see the four trades I made during the day. Green Arrow in; Red Arrow out. Simple. The trades are causing me to run out of cigars! I said it before, and I’ll say it again. If you don’t have the Arrows and my new Bias indicator, I really feel sorry for you.
BTW, last weekend I had a subscriber write me and ask what he got for my $125 Consulting Session. I told him, he got Everything. Arrows, Bias indicator, and the opportunity to attend all future Update Classes. Everything. This student had never bought an Arrows Class, the Bias Class or attended any of my Update Classes. He hemmed and hawed with emails, continually asking what he would get for the $125. Finally, I got frustrated and withdrew my offer. So now, if he wants to get the info, he can pay $399 for the Arrows, $79 for the Bias Indicator, and he won’t get a Consulting Session. As I get older, I just don’t have the patience for people who can’t make up their mind. Also, if a person can’t make up his mind about this offer, how on earth will he ever be a successful trader? This offer was a no brainer. So, I thought it would be better for me to pass on this one. Especially when I’m having multiple cigars days almost every day now. (For my student…sorry about what I did, but maybe you can take it as a learning experience).
The reason I’m sharing my feelings with you today because I really want ALL my students to have the Arrows and Bias Indicator. If you still have not decided to sign up, do it today. Once this special expires on Saturday, my B-day, it’s gone forever. Don’t be penny wise and pound foolish. Do it!
The Dean’s List is the shortest it’s ever been. The Tide continues to go out.
The Market Timing Indicator for Dow, NASDAQ, SPY, and Russell 2K are all negative.
The Scalp Trading Indicators for the Dow, S&P, NASDAQ, and Russell 2K are negative.
The Sector Ratio stayed an EXTREMELY weak 4-20 negative after Wednesday’s session. The four strong sectors were Telecoms (6), Energy (1), Foods (1) and Utilities (1). Student should note that even sectors are NOT that strong…mostly 1s. The top five weak sectors are Media (-8), Autos (-7), Retail (-7), Consumer Products (-5) and Semiconductors (-5).
Crude Oil (UCO) gained 13,35 points yesterday, closing at 164.61. The triangle on UCO continues to develop. Watch for an upside breakout. Energy stocks are still near the top of the MWL. If the market stages a short covering rally, these energy stocks should lead the way.
Forget gold, bonds and crypto for now. They’re dead money. Be patient and wait for a change in indicators.
Best Bets: I continue to look for opportunities to buy TZA, SQQQ, SDOW on any confirmed Green Arrow on the short-term bars. This has been a winning strategy for me for the past few weeks since Wave 3 down started. I see no reason to change it now.
That’s what I’m doing,
h
Market Signals for
05-12-2022
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 09 May 2022 |
NASDAQ | NEG | 03 May 2022 |
GOLD | NEG | 29 Apr 2022 |
U.S. DOLLAR | POS | 18 Feb 2022 |
BONDS | NEG | 11 Apr 2022 |
CRUDE OIL | NEU | 09 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