Professor’s Comments August 18, 2020
Posted by OMS at August 18th, 2020
The markets were mixed yesterday. The Dow fell 86 points, closing at 27,845. The NASDAQ and SPX were up 110 and 9 points, respectively. Volume on the NYSE was moderate, coming in at 103 percent of its 10-day average. There were 91 new highs and 11 new lows. Yesterday’s decline in the Dow and rally in the NASDAQ didn’t really change anything. It still appears that the markets are in the final stages of completing their topping patterns. It’s still possible that the Dow is completing a wave 4 and could have one small rally above the 28,000 level with 28,200 possible. If this rally occurs, it will make last week’s high of 28,155 wave 3 of the five wave pattern, which means the Dow should top slightly above that level. Again, IF the rally does not occur, watch for a break of the 27,624, as this would increase the odds that Major Wave 3 down is underway. The pattern on the NASDAQ also appears to be nearing completion. Yesterday’s intraday high to 11,145 slightly exceeded the 6 August high of 11,121, suggesting it was part of wave 5 up in that index. Because the NASDAQ Comp is in a rising channel, the index could continue to rise to the 11,200-11,350 level before all five waves of the pattern are complete. A decline below the 11 August low of 10,763 would suggest the rally is over. Students should continue to watch the NASDAQ as the week progresses, especially now that the markets are in the heart of a major Fibonacci cluster. Markets have a high probability of changing trends within 2-3 days of these cluster events. A break below last week’s low of 10,763 on the NASDAQ and 27,624 on the Dow will cause me to go to Full Red Alert. The Market Timing Indicators for the Major Indexes remain Positive. Scalp traders should note that the hourly timing indicators on the Dow have turned Negative. The Dean’s List remains Positive while The Tide remains Neutral. The Sector Ratio stayed at 18-6 Positive after Monday’s session. Students should continue to watch the Sector Ratio as the week progresses. IF it continues to weaken next week and turns negative, pay attention. The top five strong sectors were Retail, Service, Material, Semiconductors, and Healthcare. The five weakest sectors were Banks, Leisure, Energy, Financials, and Real Estate. There were NO CHANGES to the Model on Monday. The Model continues to hold trial positions of 1,200 shares of TWM, 1,600 shares of DXD, 400 shares of DUST, and $43,379 in cash. The Model continues to look for opportunities to buy shares of inverse index ETFs. Gold (GLG) rose 3.96 points yesterday and appears to be completing its counter trend wave 2 rally. If this is the case, GLD should begin to fall later this week. As I mentioned in the WSR, there’s still a chance that Gold (the metal) could push slightly higher to fill the gap near the 2,000 level, but it’s not required. If gold makes an impulsive move down later this week, the odds are high that wave 3 down is underway. This wave should take gold well below the 12 August low of 1,870 with significantly lower prices likely. The Euro and the Dollar still appear to be completing major reversal patterns. This would be a top for the Euro and a bottom for the Dollar. The Dollar could still use one more slight decline to just below the 92 level; the Euro doesn’t need any additional rally as it looks to have topped. If I’m correct about this, the next rally in the Dollar should be a significant Wave 3 up. Students should watch for a potential signal change next week. I’m still short a few shares of Apple, but I have been mostly scalp trading the stock as it starts to roll over. I’ll hold the short once I get a Sell Signal from the indicators. That’s what I’m doing, h
Market Signals for 08-18-2020
|
||||||||||||||||||||||||||||||||
|
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