Professor’s Comments February 17, 2021
Posted by OMS at February 17th, 2021
The markets were mixed yesterday after gaping higher at the open. The Big Move was predicted by Friday’s small change in the A-D oscillator. The Dow finished with a gain of 64 points to close at 31,525. The NASDAQ and SPX lost 48 and 2 points, respectively. Volume on the NYSE was moderate, coming in at 101 percent of its 10-day moving average. There were 382 new highs and 4 new lows. Yesterday was the second day in week that declining issues outnumbered advising issues (1745 to 1515), something we have not seen in a while.
The markets have now reached the upper trend lines of long-term patterns. There is a Fibonacci cluster window this week, where several previous tops or bottoms come together in various combinations of Fibonacci numbers. These ‘windows’ often mark a place where the market makes a major turn. I’m watching to see if it happens this time.
Tuesday’s opening pop came after the Dow reached a high of 317.67 in the futures market. So even though the Dow opened higher, it opened considerably lower than the pre-market high. The pre-open move could be considered an ‘Island Reversal’, especially if the DIA begins to move below yesterday’s low of 314.84. Beyond that is the trend line low near 314 and then 312.31. These are the lows I’ll be watching today, as a break of these lows will negate all Bullish patterns and likely cause some of the indicators to turn negative.
The DMI on the Dow turned positive on 5 February and remains Positive. The Market Timing Indicator on the Dow (DIA) and NASDAQ remains Positive. The Scalp Trading Indicators on the DIA and QQQ remain Positive. With the indexes now at target levels, students should pay close attention for any change in signals.
The Dean’s List and The Tide remain Positive. The Sector Ratio weakened to 22-2 Positive after Tuesday’s session. The top 5 strong sectors are Energy, Media, Service, Banks, and Semiconductors. The two weak sectors were Telecommutes and Food Drug. Continue to pay attention to the Sector Ratio as the week progresses.
The 0-98 Sell Signal kicked out by AI’s artificial intelligence algorithm remains unconfirmed as the momentum remains positive. As I mentioned in the WSR, I continuing to pay close attention to the ST momentum indicator, especially if the Dow begins to break below 31,244.
Model Update: There were NO Changes to the Model. It remains 100 percent in cash.
Top Stocks: Going into Tuesday’s session, the Top 5 Stocks were TDC, WPRT, DDD, SBNY and GBX. Three out of the top five either broke even or lost money on Tuesday. DDD lost 0.03 cents on Tuesday as it moved out of the Trend Zone. The reason I mention this today is because when the Top Stocks are no longer moving higher by several points each day, and begin to show signs of weakening, it’s usually not a good sign for the overall market. Remember, these are the stocks that led the market higher. When the leaders stop leading, pay attention.
Also, note how Tesla (TSLA) was down another 19 points yesterday. The stock is now down 95 points since its ST Momentum Indicator moved out of the Trend Zone. If you have large positions in any of the Top Stocks, you might want pay close attention to their ST Momentum Indicators. BYW, the ST Indicators on TSLA are now on a Sell Signal.
Also, take a look at Apple (AAPL) and note it’s HS inverse Pattern and how close it is to generating a Sell Signal. Apple is a big player in two of the major indexes. If it begins to falter, pay attention.
Gold and Silver: GLD fell 2.46 points yesterday, closing at 168.24. The metal remains on a Sell Signal, but the miners are still resisting the decline with a Neutral Signal. Yesterday the HUI dropped 7.29 points, so with narrow Bands, the decline could begin to develop legs. I continue to watch gold and the miners closely, as my target levels are significantly lower than current prices.
That’s what I’m doing,
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.
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