Professor’s Comments – Before the Open 7/29/2022

Posted by OMS  at July 29th, 2022

In yesterday’s Comments I discussed an alternate scenario for the Dow that would see it top near the 32,500+ level. Yesterday the Dow reached an intraday high of 32,610.  The rally that started about 10:30 yesterday into that high was a five wave affair. So, it’s possible that my alternate scenario, the formation of a right shoulder of a H&S pattern, is taking place.  If this is the case, the indexes should top either later today or on Monday.

If you pull up a 60 minute chart of the Dow or S&P, you can clearly see how wave ‘C’ up of Wave 2 up developed as a five wave rally from the 14 July low. In this scenario, the rally that started after Wednesday’s Fed announcement was likely the final fifth wave of that sequence.  If you put yesterday’s rally under the microscope (5 min chart), you will clearly see that it also has five waves.  So, it’s possible that sub-wave 5 of Wave ‘C’ up of Wave 2 up is either complete or nearly so.

Because of this, students should be watching the market closely during the next 1-2 days.  Any impulsive downside action now could signal that Wave 3 down is starting.

Remember too that this is still my alternate scenario.

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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
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