Professor’s Comments Update 2/20/20
Posted by OMS at February 20th, 2020
The markets rallied yesterday on relative light volume and narrow breadth. The Dow was up 116 points, closing at 29,349. The NASDAQ and SPS finished with gains of 84 and 16 points, respectively. Volume on the NYSE was moderate, coming in at 96 percent of its 10-day average. There were 252 new highs and 59 new lows.
There was another small change in the A-D oscillator yesterday, this time only 2 points, so we need to be on the lookout for another Big Move within the next 1-2 days.
The one thing I noticed about yesterday’s rally was that it occurred on light breadth. So even though The Tide turned back to neutral again, the most important breadth indicator, the A-D oscillator remains negative. I would feel much better about a rally if I saw this indicator turn positive. As long as it remains negative, it tells me that more stocks are moving lower than higher. This is not something you would expect to see if the market is to move higher into March. So, we’ll need to watch the A-D oscillator during the next few days.
From a pattern perspective, yesterday’s rally from oversold conditions was a positive. It’s possible, even likely, that corrective wave 2 of final Wave 5 up has completed and wave 3 up is underway. Another rally day either today or Friday will confirm that wave 3 up has started. This is he reason the Model bought a ‘trial’ position in DDMs yesterday. Once trading started yesterday, my VTI-volume indicator re-entered the Up-Trend Mode with the 2-period RSI showing oversold conditions. It was time for another ‘Rifle Trade’. I look for these high probability trades when the stock is oversold (2-period RSI<30) and the VTI-volume indicator is showing a Up Trend is in place.
Another reason for the trade was the fact that the Sector Ratio was increasing. After yesterday’s session the Sector Ratio remained at 15-9 Positive. If wave 3 up is starting, the Sector Ratio should continue to move higher, hopefully greater than 20-4 positive. But right now, that’s still not happening. Because of this I’m still cautious. Remember, we’re trading a final Wave 5 and these waves can and often do truncate. They don’t have to reach their projected targets. And with conflicting news from China about the spread of the corona virus, the odds of a truncation are high. That’s why I’m only taking small positions.
The Strong Sector List was led by Household Products, Semiconductors, Foods, Computers, and Financials. The Weak Sector List was led by Materials, Autos, Retail, and Energy.
The Model bought 350 shares of DDM yesterday at 58.78. The remainder of the Model is in cash. BTW, I’m still at sea so I don’t have access to the Model’s statistics. I’ll post the Updated statistics when I get home this weekend.
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.
That’s what I’m doing,
h
Market Signals for
02-20-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 19 Feb 2020 |
NASDAQ | POS | 04 Feb 2020 |
GOLD | POS | 17 Jan 2020 |
U.S. DOLLAR | POS | 31 Jan 2020 |
BONDS | POS | 07 Feb 2020 |
CRUDE OIL | NEU | 12 Feb 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