Professor’s Comments November 23, 2021
Posted by OMS at November 23rd, 2021
I will be traveling early tomorrow morning to be with my family on Thanksgiving, so I’m writing these Comments tonight. Also, because the market will be closed on Thursday for the Thanksgiving Holiday, and will close early on Friday, I’ll post a few brief Comments later in the week, especially if things start to get ugly.
Today, Monday, was a very unusual day for the markets. They bolted higher at the open but in doing so, the breadth was negative. That’s right, even though the Dow and NASDAQ gapped higher, the breath was decidedly negative. New lows on the NYSE jumped to 112, which was the largest number of new lows since August. That’s EXTREMELY unusual! I couldn’t believe the numbers when I saw them. Anyhow, after checking the numbers to make sure they were right., I got curious. I went back and looked at several cases where new lows hit at two month low, but the market posted a higher low, as the S&P did Friday. In all the cases I looked at, the markets were trading lower a week later. It appears that the large negative divergence between price and breadth was too much of a drag for the market to overcome.
At the end of the day, even though all of the major indexes traded substantially higher during the day, by the close, all but the Dow finished lower. It was a classic reversal day from a candlestick perspective.
BTW, in the WSR, I mentioned that the Dow could rally to the old H&S neckline support level at 35,915, which would likely act as strong overhead resistance. During the day, the Dow reached a high of 35,908 before falling to 35,602 at the close. One of the takeaways from today that students should note is how strong the overhead resistance of a failed H&S neckline is to any subsequent rally, even one driven by significant short selling.
The Market Timing Indicator on the Dow has turned Negative. The same Timing Indicators for the S&P (SPY) and NASDAQ (QQQ) remain Positive.
The Scalp Trading Indicators for the Dow (DIA) remain Negative. The same indicators on the S&P (SPY), and NASDAQ (QQQ) remain Positive.
The Dean’s List has turned Neutral.. The Tide remains Negative.
The Sector Ratio weakened to 15-9 Positive after today’s session. The top five strong sectors were Autos (6), Retail (5), Service (5), Semiconductors (4), and Banks (4).
The top five weak sectors were Media (-3), Telecoms (-2), Energy (-1), PharmaBio (-1), and Computers (-1).
Top Stocks: In the WSR, I mentioned that I was holding positions in inverse ETFs, including SDOW and TZA based on the 120s. During the day, Red Arrows were generated on theses positions, however the Red Arrow on the TZA was never confirmed, so I held my position. When the momentum on SDOW went negative, I was working in the garage, so I didn’t see the change and didn’t sell. By the time I got back to the trading desk, I saw the Q’s were dropping like a rock, and the momentum on SDOW turned positive again. Good thing I held off selling SDOW, because a short time later, the entire market was dropping like a rock. Sometimes its better to be lucky than good. The thing that saved the day for me was the non-conformation of the Red Arrows on TZA. Ya gotta love those arrows and confirming indicators!
Because today’s rally on the Dow appeared to be part of a complex wave 2 up within Wave 3 down, I’m not planning to do anything different than what I discussed in the WSR. I still believe that the markets are headed a lot lower, and now that I’m back on Red Arrows on the 120s, I’m just going to stay the course and look to establish new positions in SQQQ and SPXU
I wish you all a Happy Thanksgiving Holiday. If you’re traveling, I hope you have a safe trip.
That’s what I’m doing.
h
Market Signals for
11-23-2021
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 17 Nov 2021 |
NASDAQ | POS | 19 Oct 2021 |
GOLD | NEU | 19 Nov 2021 |
U.S. DOLLAR | POS | 19 Nov 2021 |
BONDS | POS | 19 Nov 2021 |
CRUDE OIL | NEG | 19 Nov 2021 |
CRYPTO | NEG | 17 Nov 2021 |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments