Professor’s Comments May 25, 2021
Posted by OMS at May 26th, 2021
In the WSR, I discussed how the indexes were forming an a-b-c flat pattern for wave 2 up. Yesterday’s rally to 34,473 on the Dow appeared to be part of the final stages of that pattern. If yesterday’s high was not the end of the wave 2 rally, the end should be getting close. Once the wave 2 rally completes, wave 3 down should drop prices to the 32,500 level, possibly lower.
The pattern on the S&P is similar but slightly different from the Dow’s 3-3-5 flat. Yesterday’s high of 4210 occurred with extremely low volume, the slowest trading day of the year. The low volume ‘rest day’ suggests the S&P could be forming an expanding flat instead of a standard flat. If this is the case, the S&P could make one more rally that exceeds yesterday’s high and tests the 7 May high of 4238 before wave 3 down begins. I’m still using the 3,900 to 3,910 level on the S&P as my initial target, possibly lower, and 11,700-11,800 on the NASDAQ, with 11,500 possible.
The Market Timing Indicators on the Dow and NASDAQ have turned Neutral after yesterday’s session. The ST Indicators for the Dow (DIA) are Positive. The same ST Indicators on the S&P (SPY) and NASDAQ-100 (QQQ) remain Neutral.
The Dean’s List has turned Positive. The Tide has turned Neutral.
The Sector Ratio strengthened to 20-4 Positive after Monday’s session. The top 5 strong sectors were Service, Semiconductors, Leisure, PharmaBio, and Financial. The Service Sector has the highest RS ranking at 5. All the other sectors on the Strong List have rankings of 0, 1s, and 2s. In other words, the RS rankings are not suggesting a lot of strength. The four weak sectors were Media, Telecoms, Retail and Consumer Products. Continue 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), Friday’s Top Stock, was up 77 cents to 27.01. Most of the top gold stocks were flat to slightly higher. #3 Dillard’s pulled back after an exceptional week; #5 TDC was up 1.7 points. So, 4 out of the Top 5 Stocks were up yesterday, but because two of them were gold related, the overall performance of the Top 5 was nothing to get excited about.
Workhorse (WKHS) the #1 stock on Friday’s Weak List was down 0.15 cents on Monday, even though the markets had a big rally day. TSLA, at #2, rallied with the market, but THO, the third weakest stock was down 1.64 points. CNI, tied for #4, was down 1.66.
Gold: No change from my Comments in the WSR. Gold remains at a major crossroads. The metal remains above its Upper Channel Line and if this pattern continues, it could trade to the 1,950 level. As long as the miners stay at the top of the MWL and the indicators remain positive, there’s a good chance that Wave 3 up is starting. A break below 1,860 would suggest that the rally in gold has ended.
Bonds: No change in my analysis for Bonds. They still appear to be stuck in a wave 2 retracement within Wave 5 down. I consider Bonds to be dead money here, believing that there are much better trading opportunities elsewhere.
That’s what I’m doing,
h
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
05-26-2021
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 24 May 2021 |
NASDAQ | NEU | 24 May 2021 |
GOLD | POS | 06 May 2021 |
U.S. DOLLAR | NEG | 12 Apr 2021 |
BONDS | NEG | 11 May 2021 |
CRUDE OIL | NEU | 25 May 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