Professor’s Comments November 12, 2020
Posted by OMS at November 12th, 2020
The Dow was relatively flat yesterday while technology stocks had a big day. The Dow finished with a loss of 23 points, closing at 29,398. Intraday, the Dow reached a high of 29,593, which was a 50 percent retracement off Monday’s low. The intraday high and low stayed within Monday’s large candle, as did Tuesday’s, which could have short-term negative implications going forward. The NASDAQ and SPX gained 233 and 27 points, respectively. Volume on the NYSE was moderate, coming in at 106 percent of its 10-day average. There were 47 new highs and only 7 new lows.
On Monday, the Dow has reached a high of 29,934. I had been using a target of 30,000, with the possibility of 33,300 for the post-election rally. So, it’s possible the top is in. If Monday’s high holds, the wave count could be labeled as wave 5 up of Wave 5 up of Major Wave 5 up….which means it’s likely the end of the Bull Market, an advance that started in March 2009.
At this point, we don’t know this yet. What we do know is that the decline that took place since Monday’s high occurred in five distinct waves. Then the rally since Monday’s low was an a-b-c affair, so it’s possible that it was a mini wave 2 up. The fact that it was a 50 percent retracement rally also supports the wave 2 scenario. If this is what’s happening, the Dow should begin to fall today as wave 3 down of a five wave down sequence begins to unfold. The thing I’ll be looking for is an impulsive decline. If the decline is not impulsive, then it’s likely not part of wave 3 down. Once all five waves are complete, the Dow should be trading near the 29,144 level. If it breaks this level, any remaining bullish potential is likely over.
The Bearish level for the S&P is 3,234. The NASDAQ is also in a Bearish wave 2 retracement rally since Monday’s high. It could still rally to the 11,800+ level before wave 2 completes. If it goes much above Monday’s high of 12,108, it means the Bullish case is extending. So, 12,108 is the upside key number for the NASDAQ. On the other hand, a break of Monday’s low near 11,400 would likely go unchecked until the gap near 11,200 is filled.
The Market Timing Indicators for the Major Indexes remain Positive.
The Scalp Trading Indicators are also Positive, but a small negative divergence has developed on the Dow’s momentum indicator. That divergence should be taken as a warning. So, IF the volume indicator turns negative with a diverging momentum indicator, it would generate a Sell Signal. Student should start watching the volume indicator on the daily chart in the days ahead.
The Dean’s List and The Tide are Positive.
The Sector Ratio stayed at 23-1 Positive after yesterday’s session. The top 5 strong sectors were Real Estate, Banks, Service, Financial, and Semiconductors. The only weak sector was Computers.
Gold (GLD) fell slightly yesterday, dropping 0.76 cents to 174.9. At this point I’m avoiding gold as it appears Wave 4 down is not complete. Also, as I mentioned in Tuesday’s comments, there is way too much Bullish optimism in small traders in the gold market. This usually does not bode well for gold prices.
There were NO Changes to the Model after yesterday’s session. The Model remains 100 percent in cash. The Model will likely remain in cash for the next few days until the conflicting patterns are resolved.
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
11-12-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 09 Nov 2020 |
NASDAQ | POS | 06 Nov 2020 |
GOLD | NEG | 11 Nov 2020 |
U.S. DOLLAR | NEG | 09 Oct 2020 |
BONDS | NEG | 09 Nov 2020 |
CRUDE OIL | POS | 11 Nov 2020 |
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