Professor’s Comments January 24, 2023
Posted by OMS at January 24th, 2023
Stocks rallied yesterday on near average volume. The Dow finished with a gain of 254 points, closing at 33,628. The large cap index reached an intraday high of 33,782. He NASDAQ and S&P wee up 224 and 47 points, respectively. Volume on the NYSE came in at 98 percent of its 10-day moving average. There were 86 new highs and only 8 new lows.
Last week, I said the Dow would likely rally to the 34,400+ level before retracement sub-wave 2 completes….if it was sub-wave 2 up. I also mentioned the possibility that the rally could carry to even higher levels IF the previous decline was part of Wave 4 down, making the rally since last Friday still part of wave ‘c’ up in a Double Zig-Zag patter for Wave 2 up. After watching yesterday’s rally, I’m still not sure which wave count is correct, but with positive indicators on the cockpit, I’m leaning toward the later. Technology stocks, like Netflix (NFLX) and Tesla (TSLA) have become very strong the past few days, which has also led to advances in the S&P. But so far, the rally still appears corrective rather than impulsive, so once it completes, maybe in another day or so, I would expect the overall market to start its Major Wave 3 decline.
Right now, I’m just watching for a change in the indicators. The Dow (DIA) is still on the Red Arrow on its Daily Chart from 18 January. However, the Bias, which is showing EXTREME negative divergence, is still positive. Our Trend Indicator is still showing NO Trend. The same indicators for the NASDAQ (here I’m using the QQQ) are all positive, and on a Green Arrow from 20 January. This tells me that Wave 2 up on the Q’s will likely re-test its 13 December high of 296.88 before it completes. Yesterday the Q’s closed at 288.92 after reaching an intraday high of 290.21. The Q’s are also showing negative divergence, but it’s not as extreme as the divergence on the Dow and S&P. In the WSR, I said that the IF my wave count ( wave 2up and not a wave 4), is correct, sub-wave 3 down should start sometime early next week. Based on what I saw yesterday, I’m gonna stick with that forecast.
The Market Timing Indicators are currently positive on the Dow and NASDAQ.
The Dean’s List is positive. The Tide is also positive.
The Sector Ratio strengthened slightly to 18-6 positive after Monday’s session. The top five strong sectors were Media (4), Consumer Products (3), Retail (3), Material (3), and Cap Goods (2). The top five weak sectors were Food Drug (-1), Foods (-1), Utilities (-1), Telecoms (-0), and PharmaBio (-0).
My Trades: I was mostly on the side-lines yesterday. I’m still looking for an opportunity to add to my Puts and/or start buying SDOW, SQQQ and TZA. For this retracement rally, I’m currently using a 2-day, 8-minute chart. The slightly longer time period does a much better job at counting the individual waves. For example, when the Boas turned positive on UDOW last Friday, the eight-minute chart absolutely nailed the rally and kept you in the trade until a Red Arrow appeared yesterday at the 11:30 mark calling for an exit. After that 2-day ‘Stick’, there were two additional Green Arrows that formed while the ‘Blade’ was developing. Students should note how the Bias on UDOW’s 8-min bars while positive, is currently showing EXTREME negative divergence, so at least for the Dow, the current rally could be nearing completion.
Gold (GLD): With gold above my near term target, I’m still watching the indicators to see if it wants to pull back. Right now, GLD is in the Trend Mode, and still on the Green Arrow that was generated on 27 December. Like I said in the WSR, I’m concerned about gold’s rally because I see Dollar close to bottoming and the Euro looking like its completing five waves up. So, pay attention and watch for a Red Arrow on the Daily’s.
That’s what I’m doing,
h
Market Signals for
01-24-2023
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 23 Jan 2023 |
NASDAQ | POS | 11 Jan 2023 |
GOLD | POS | 27 Dec 2022 |
U.S. DOLLAR | NEG | 04 Jan 2023 |
BONDS | NEU | 20 Jan 2023 |
CRUDE OIL | POS | 11 Jan 2023 |
CRYPTO | POS | 05 Jan 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.
Category: Professor's Comments