Professor’s Comments March 30, 2021
Posted by OMS at March 30th, 2021
Yesterday was another day of diverging markets. The Dow rallied to a new high, gaining 99 points to close at 33,171 while the NASDAQ lost 78 points. The rally in the Dow was accomplished on weak breadth and volume which usually occurs in the final fifth wave of a five wave sequence. Total volume was less than 11 billion shares which is well below its 10-day average. The strange thing about yesterday’s rally on the Dow was that it was accomplished by more down volume than up with 61 percent of the volume on the downside vs. only 31 percent on the upside. In other words, yesterday’s rally was not strong. The sub-waves suggest that a major top is fast approaching.
Yesterday’s high of 33,259 on the Dow slightly exceeded the previous 18 March high of 33,227. So, from a technical perspective, it satisfies the requirement for a final wave 5. If the Dow is still not finished with its rally after yesterday’s performance, it’s still possible to see slightly higher prices, but because of the weak volume and breadth, I wouldn’t expect the final top to be more than a few points above yesterday’s high. A close below the 25 March low of 32,071, which is the previous wave 4 low, or a ST Indicator signal change, would confirm that the final top is in.
The market will enter a Fibonacci cluster window starting today. With prices rising into this window, the indexes could top and start a significant decline within a few days. The next major window won’t occur until late August, so this window could be important.
Tech stocks on the NASDAQ continue to lag the Dow and S&P. As I mentioned before, the pattern on the NASDAQ is slightly different from the Dow. The NASDAQ appears to have completed a classic Wave 2 retracement on 17 March and is starting its Wave 3 down. A decline below the 5 March low of 12,397 would confirm that Wave 3 down is underway. A break of this low should drop the Composite back to the 21 September low of 10,519. Yesterday the NASDAQ closed at 13,059.
TSLA dropped 7.42 points yesterday as its ST momentum indicator entered the Down Trend Zone. My next short-term target for the stock is 540, which is where the 200-day moving average is currently located. After that, the stock could see the mid-300s which is the target projected by its Hockey Stick pattern.
Apple (AAPL) gained 0.18 points yesterday as it continues to develop the ‘Blade’ of its inverse Hockey Stick Pattern. Students should note how the Bollinger Bands on AAPL continue to narrow as it trades between the 50 and 200 day moving averages. If AAPL breaks below its 8 March low of 116.21, it would project a move to the 88 level. I’ll say it again…. with TSLA and AAPL, two of the largest and most popular stocks on the NASDAQ, developing Bearish patterns with narrow Bands, students should pay attention to what’s happening on the NASDAQ and not the Dow.
The Market Timing Indicators on the Dow are Positive while the same indicators on the NASDAQ remain Negative. The Scalp Trading Indicators on the DIA remain Positive. The same indicators on the NASDAQ-100 (QQQ) remain Negative.
The Dean’s List is positive while The Tide remains Negative.
The Sector Ratio remained strong at 24-0 Positive after yesterday’s session. The top 5 strong sectors were Retail, Service, Cap Goods, Autos, and Transportation. There were no weak sectors. Continue to look for changes to the Sector Ratio as the week progresses.
Model Update: There were NO Changes to the Model. It remains 100 percent in cash. Remember, the Model is based on the NASDAQ-100 (QQQ) and right now the Qs are on a Sell Signal.
Top Stocks: Several of the Top Stocks on the MWL pulled back yesterday after reaching highs on Friday. The thing students should note about the Top Stocks is how the RS ratings have dropped in the last week or so. For the past few months, the RS ratings were high, some with ratings as high as 30 or more. Go back and check…it’s easy. A month ago, many of the top stocks had RS ratings of 15 or higher. This is no longer the case. Last Friday’s Top Stock, ADS, only had a RS rating of 7 which is not much better than the rest of the pack. The rest of the Top Eight only had RS ratings of 5-6. So, the MWL is telling us that while these stocks are among the best of the best, they are NOT really that strong. The List is telling us that even the Top Stocks are starting to weaken. This is an especially important thing to note as it is another measure of the health of the overall market.
Gold and Bonds: Gold (GLD) fell 1.93 points yesterday to 160.31. It remains on a Sell Signal. However, as GLD approaches its 8 March low of 157.13, it should be watched closely for signs of a bottom. If GLD holds 157, a major Wave 4 bottom might be at hand. On the other hand, if 157 does not hold, the ETF will likely start another leg down dropping another 20 or more points before the final bottom is reached. The inverse Hockey Stick Pattern with narrow bands suggests a target of 140 or lower if 157 does not hold.
I’m still on the sidelines with Bonds.
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
03-30-2021
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 26 Mar 2021 |
NASDAQ | NEG | 01 Mar 2021 |
GOLD | NEG | 29 Mar 2021 |
U.S. DOLLAR | POS | 09 Mar 2021 |
BONDS | NEG | 27 Jan 2021 |
CRUDE OIL | NEU | 24 Mar 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