Professor’s Comments August 24, 2021
Posted by OMS at August 24th, 2021
In last weekend’s WSR, I discussed two possible scenarios for the Dow. I said that if the Dow broke above the 35,177 level, it would continue to rally in a wave 5 up, a rally that could carry it toward the 35,800 level. That’s what appeared to be starting yesterday. The Dow gapped higher at yesterday’s open, blasting through the 35,177 level in the first minute and then continued to move higher throughout the day. The large cap index closed 215 points higher at 35,335. The NASDAQ and S&P also had strong days with each index gaining 228 and 38 points, respectively. The rally toward 38,800 on the Dow will likely consist of three waves. That’s because last week’s low was a wave 4 within an Ending Diagonal Pattern. The waves within an Ending Diagonal usually have 3 waves. If this is the case, the rally off that low should be an a-b-c affair. Yesterday’s rally was likely wave ‘a’ up of the pattern. Once wave ‘a’ up completes, wave ‘b’ down should drop the Dow back down to the 35,100 level before the wave ‘c’ up rally completes near 35,800. I still believe that the Dow will complete its final rally to a top within my projected window of 26 August to 10 September plus or minus a week. My projected target for this Bullish scenario remains near the 35,800 level. The Market Timing Indicators for the Dow, S&P, and NASDAQ are Positive. The Scalp Trading Indicators for the Dow (DIA), S&P (SPY) and NASDAQ (QQQ) have turned Positive. The Dean’s List remains Positive. The Tide remains Negative. The Sector Ratio strengthened to 14-10 Positive after yesterday’s session. The top five strong sectors were Food Drug (3), PharmaBio, (2), Insurance (2), Household Products (2), and Cap Goods (1). The top five weak sectors were Energy (-5), Autos (-2), Leisure (-1), Foods (-1) and Semiconductors (-1). Model Update: There were NO Changes to the Model. It is still 100 percent in cash. Top Stocks: In the WSR I also discussed the importance of the cockpit indicators and how I use them to select Top Stocks and ETFs from the Member’s Watch List and Dean’s List. So early Monday, with GBTC at the top of the Dean’s List and MARA and RIOT at the top of the Member’s Watch List, I was just looking for an opportunity to enter the stocks. That opportunity came about an hour after the open when both MARA and RIOT pulled back to where the ST Volume indicator turned positive again with a positive bias. I was into the crypto miners. I plan to hold MARA and RIOT, two EXTREMELY volatile stocks if the indicators remain positive. My research shows that once the cockpit indicators on a commodity like gold or crude oil turn in one direction, the indicators tend to stay in that direction for a while. And because I believe that Bitcoin is starting a Major Wave 5 up, a wave that could take it past its Wave 3 high of 63,300, I’m in no hurry to sell the Bitcoin miners, especially since they are #1 and #2 on the List with extremely strong RS rankings. Like I said in the WSR, I don’t have a Market Timing Indicator on the cockpit for Bitcoin or the Bitcoin Miners. But if I did have a Timing Indicator for Bitcoin, it would have turned positive on Friday using GBTC as the underlying index. Gold: The cockpit indicators on GLD also turned Positive yesterday as ETF gained 2.03 points to close at 168.73. The rise and change in indicators make the decline since the 1 June high of 178.78 a completed a-b-c pattern. And because a-b-c patterns are corrective, it increases the odds that GLD will now rally above 178.78 in the weeks ahead. That’s what the chart says for gold the metal….I’m not so sure about what the charts say for the miners. They’re still stuck in negative down trends. It’s possible that gold could trade higher as the miners move lower. The miners are NOT gold. One is gold above the ground; one is a mining company that still has a lot of work to get the metal. There’s a BIG difference. So, be patient. Pay attention to the Scalp Trading Indicators if you want to trade the miners. BTW, at this point, I’d MUCH rather trade the Bitcoin miners. They’re at the top of the Lists; the gold miners are not! Bonds: Bonds appear to be forming a tiny triangle as they approach the top of a Wave 4 retracement pattern. The wave 4 suggest Bonds could make a small rally before the pattern is complete. But what’s a few points when there is so much downside risk. I still believe that once the current rally in Bonds is complete, Bonds will start tanking as interest rates rise. 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 08-24-2021
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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