Professor’s Comments November 24, 2020
Posted by OMS at November 24th, 2020
The market rallied hard yesterday after coming within 31 points of my projected low for wave 2 down. The Dow finished with a gain of 328 points, closing at 29,591. So, with yesterday’s rally, it’s now likely that wave 3 up of a five-wave sequence is underway. If this is the case, the Dow should re-test the 30,000 level with even higher levels possible. Right now, that higher level cannot be accurately predicted, but if the rally continues as I expect, wave 3 up should complete somewhere between 30,000 to 30,300. Then after small pullback for wave 4, wave 5 up could see the Dow trading above the 30,300 level. The NASDAQ also finished higher yesterday, up 26 points, after spending most of the day in negative territory. Volume on the NYSE was moderate, coming in at 100 percent of its 10-day average. There were 202 new highs and 3 new lows.
Yesterday’s rally was large, so it appears we’ll need to pay more attention to the ‘Monday phenomenon’ I discussed in the WSR. But the thing I was most excited about was the performance of the three top stocks on the Member’s Watch List. We nailed it!!!! This is big news, and it has large implications for us going forward. The top three stocks on the Member’s Watch List, all energy related, shot higher after yesterday’s open. It was as if we had a crystal ball that told us what would happen. Nabors Industries (NBR), the number one stock on the MWL finished up 3.57 points. Devon Energy (DVN), a 14-dollar stock was up 1.32 points. HP, the third energy stock was up 2.9 points, which was over a 10 percent gain. DIG, the top stock on the Dean’s List finished up a whopping 8.99 points! Pretty cool!
I cannot tell you just how much fun it was trading yesterday, knowing ahead of time which stocks to trade and what they would likely do. I must admit that I was not paying too much attention to what was happening to the indexes, …all I was focused on was my top three energy stocks. I had a great day and I hope you had one too.
So now that we know one way to use the Member’s Watch List, I am going to spend even more time figuring out other ways to use it. For example, several years ago, I developed a rotation strategy that kept me in stocks on the Dean’s List. It worked extremely well on the Buy side, identifying, and keeping me in stocks and ETFs as a rally progressed. The strategy was extremely simple. All you had to do was stay in the top ETFs on the Dean’s List. The downside was that its Sell Strategy gave back too much of the profit. But when I used the ST Indicators as part of a new Sell Strategy, the research I did last weekend shows that the performance of the old rotation strategy can improved considerably.
I also plan to look at how the volume indicator- MWL combination can be used to trade options. After yesterday’s BIG DAY, I must tell you that I am really excited about the possibilities of using at-the-money options as the trading vehicle on days like yesterday. BTW, I also plan to have several ‘free’ training sessions next week so you can see EXACTLY what I did to identify the conditions that led to yesterday’s nice gains. That way, students who purchased my Scalp Trading Class will be able to learn to identify the EXACT time when conditions are right to purchase stocks. I know you will find this training exercise extremely interesting and informative. I also want to show you some of the work I’ve been doing with an algorithm that I have been using to identify stocks that are ready to trend. The reason I want to do this is so we don’t have to hold stocks or ETFs when they are not trending. This will reduce the risk of getting caught with a ton of stock when the market finally turns south, probably early next year. This is also something that is extremely exciting for me. So, IF you purchased my ST Class, and want to attend one of these sessions, just send me an email and I will send you the details. If you have not purchased the ST Class, you might want to do it in the next few days. That way you will not miss out on the free training sessions.
Anyhow, even though I cannot confirm that wave 3 up is underway, we know that yesterday’s rally was impulsive, enough to turn the cockpit indicators positive. So, for now I must assume that Wave 3 up is underway. A rally tomorrow would lend additional support to this thesis. Also, there is a tendency for the market to trade higher in the days ahead of the Thanksgiving Holiday, which also supports the Bullish case. BTW, the market will be closed on Thanksgiving Day and will close at 1pm on Black Friday. My next update will be on Friday morning. One other thing…while the odds are overwhelmingly positive for a continuation of yesterday’s rally, you might be a little cautious as the close approaches. The Wednesday ahead of Thanksgiving is usually market by a lot of volatility and has mixed results as to gains/losses. The odds suggest a pullback on Wednesday with a continuation of the rally on Friday.
The Market Timing Indicators for the Major Indexes have turned Positive.
The Scalp Trading Indicators on the Dow (DIA) and NASDAQ are now Positive.
The Dean’s List and the Tide are Positive.
The Sector Ratio remains strong at 22 – 2 Positive. The top 5 strong sectors were Energy, Media, Real Estate, Banks, and Leisure. The two weak sectors were Computers and PharmaBio. So, Energy has now moved to the top Sector on the List. Should be fun to watch energy stocks during the next few days or… weeks?
Gold (GLD) broke through support yesterday, dropping 3.46 points to 172.23. The picture for gold continued to look Bearish. As I mentioned last week, IF GLD breaks below support at the 175 level, it could fall to the 155-156 level. I will stay with that projection for now.
Model Update: After being down for most of the day, the ST indicators on the NASDAQ-100 (QQQ) finally turned positive just before the close. When this occurred, the Model bought a 50 percent position in the Q’s at 290.05. So now, the Model owns 180 shares of QQQ with a cash balance of 52,169. With positive indicators on the Q’s, the Model will look to add to its position on any pullback.
I won’t be trading today…I’m going fishing. I hope you all have a wonderful Thanksgiving Holiday.
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
11-24-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 23 Nov 2020 |
NASDAQ | POS | 23 Nov 2020 |
GOLD | NEG | 18 Nov 2020 |
U.S. DOLLAR | NEG | 09 Oct 2020 |
BONDS | POS | 19 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