Professor’s Comments April 25, 2023

Posted by OMS  at April 25th, 2023

Stocks were mixed yesterday. The Dow finished with a gain of 67 points, closing at 33,875,. The NASDAQ lost 35 points; the S&P gained 4 points. Volume on the NYSE was moderate, coming in at 92 percent of its 10-day moving average. There were 53 new highs and 40 new lows.

The listless, sideways trading we’ve seen for the past few weeks continues to puzzle. Most times, whenever I see sideways trading, I assume that the market is developing a wave 2 or a wave 4. In the current case, especially with a Fibonacci turn window scheduled for 1-10 May, the odds are high that the sideways action is wave 4 of Wave ‘e’ up. This means that the likely outcome of the pattern will be a moderate rally into early May. However, the overall market is starting to look weak, especially the NASDAQ and Russell 2K, so it my be that the Dow and S&P rally, but the tech heavy NASDAQ and small cap Russell 2K do not. We should know in the next few days, as the turn window is fast approaching.

One thing I noted from my travels is that inflation is NOT going away anytime soon. Last night, CANE, the ETF for sugar was at the top of the Dean’s List. This is troubling as sugar is in just about everything we eat, which means that most foods will cost more. In the past month, CANE has moved from 10 bucks to 13, an increase of about 30 percent. So despite what the government s telling you about inflation being under control, the price of sugar is telling us otherwise.

I also noted that the RWM, the inverse ETF for the Russell 2K, has appeared on the Dean’s List. This is the first inverse to appear on the List since the current rally started. Right now, the Market Timing Indicators for the RUT are still positive, so I’m just watching for now. But if the indicators on the RUT turn negative, RWM and TZA will likely be the first inverse index ETFs that I will be adding to my portfolio.

Even though stocks traded mostly sideways yesterday, the VIX has started to rise. Yesterday it gained 12 cents to 16.89. that’s not much of a change for he VIX, but if it continues to rise, pay attention. Remember, the VIX is now near at its lowest point since October 2021. So if it continues to rise, pay attention!

As of Monday’s close, the Market Timing Indicators on the cockpit for the Dow are positive.  The same indicators on the NASDAQ are neutral.

The Dean’s List has turned neutral. The Tide is also neutral.

The Sector Ratio strengthened to 7-17 negative after Monday’s session. The top five strong sectors were Healthcare (3, Household Products (2, PharmaBio (1), Foods (1), and Computers (0). The top five weak sectors were Retail (-8), Banks (-5), Technology (-2), Telecoms, (-2) and Service (-2).

My Trades:  I made three trades with ThinkorSwim on my I-phone yesterday while I was touring Rouan, France. It was pretty cool to have this capability. The only thing I noticed was that Green or Red dots appeared on the price bars in addition to a color change of the barsonce a trend was in place. It wasn’t bothersome in the least, just slightly different than I was used to. The colored dots did not change the outcome of any of my trades as all three were successful.

BTW, no matter where I went yesterday, the internet signal strength I had from my T-Mobile Magenta Plan was fantastic! Sure beats having to buy a SIM card for every country I want to visit. Once I landed, all I had to do was turn on my phone and I could make phone calls, get text messages, or start trading immediately. Simple!

All I’m doing now is waiting for the indicators to turn.

That’s what I’m doing,

h 

Market Signals for

04-25-2023

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.