Professor’s Comments July 8, 2021
Posted by OMS at July 8th, 2021
I don’t have a lot to add to Wednesday’s Comments after watching yesterday’s action. The Dow still appears to be putting in the final touches of retracement wave 2 up. This wave started after wave 1 down completed at a low of 33,312 on 21 June. At its high on 2 July, wave 2 up retraced all but 28 points of the wave 1 high of 34,848. The retracement looks complete. Wave 3 down should be next.
Volume on the NYSE was moderate, coming in at 100 percent of its 10-day average. There were 211 new highs and 38 new lows. The number of new lows is starting to increase. Also, even though the Dow rose 104 points yesterday, declining issues outpaced advancers by 1,703 to 1,578. Down volume also outpaced up volume by 62 to 38 percent. This is not what you would expect in a healthy market.
In Wednesday’s Comments, I talked about watching for downside follow through. We didn’t get it yesterday as the trading action never developed anything impulsive to the downside. An early attempt at a decline was easily reversed. The reversal appeared to form a small a-b-c pattern to complete wave 2 up. If this is the case, wave 3 down could begin today. Again, the thing I’m watching for is impulsive action to the downside.
Same thing for the S&P and NASDAQ. Both indexes have reached their projected targets and the patterns appear complete with respect to wave count. All that’s needed now is an impulsive decline and a change in the Market Timing Indicators.
There were NO CHANGES to the Market Timing Indicators after yesterday’ session. The indicators on the Dow, S&P, and NASDAQ all remain Positive.
The Scalp Trading Indicators for the Dow (DIA), S&P (SPY), and NASDAQ-100 (QQQ) remain Positive.
The Dean’s List remains Positive. The Tide remains Negative.
The Sector Ratio strengthened to 18-6 Positive after yesterday’s session. The top 5 strong sectors were PharmaBio with an RS rating of 3, Consumer Products (1), Retail (1), Computers (1) and Services (1). The top five weak sectors were Banks (-4), Media (-1) Transportation (-1), Foods (-1) and Semiconductors (0). Continue to watch for weakness in the Sector Ratio as the indexes complete the final waves of their Bullish patterns.
Model Update: There were NO Changes to the Model. It remains 100 percent in cash.
Top Stocks: Several of the Top Stocks from Tuesday’s MWL had a nice day yesterday. Biogen (BIIB) gained 10.44 points to 355.33. Apple (AAPL) gained 2.55 points as the Computer Sector continues to be one of the top sectors. ABIOMED (ABMD) jumped another 7.82 points after being up 9.69 points on Tuesday. Students should note how the top stocks continue to come from the strongest sectors.
Weak Stocks: Gamestop (GME) was the top stock on the yesterday’s Weak List. It was followed by CCL, CVI, SABR, and BBBY. If the market starts to decline, these weak stocks should lead the way down.
Gold: Gold rose another 0.64 cents yesterday. The rise was still not enough to turn the Timing Indicator for gold Positive. As I mentioned in Wednesday’s Comments, I’m still watching gold and the Dollar. BTW, gold continues to form a large Bullish Cup and Handle Pattern. The pattern is easily seen on a daily chart of GLD. Right now, GLD is oversold as it forms the ‘Handle’ of the pattern. If I’m right in interpreting the pattern, gold should be headed sharply higher in the months and years ahead. The pattern suggests a longer term target near 3,000 for the metal. The only reason I’m not buying gold now is because there is still a possibility that the current rally in gold is part of an a-b-c retracement move. If this is the case, gold could rise to the 1,850 level in wave ‘b’ up and then start a wave ‘c’ decline that could take it to the 1,560 level +/-. This is the reason I want to see the Timing Indicators turn positive before buying gold.
Bonds: No change in Bonds. Bonds still appear to be completing a retracement wave 4 that started form the 18 March low. The Timing Indicators on Bonds remain Positive. All I’m doing now is waiting for a change in signal which would likely indicate the start of wave 5 down. Again, no need to hurry into the trade. Wait for the signal to change. Bonds are not where the action is now.
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
07-08-2021
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | NEU |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 30 Jun 2021 |
NASDAQ | POS | 07 Jun 2021 |
GOLD | NEU | 06 Jul 2021 |
U.S. DOLLAR | POS | 16 Jun 2021 |
BONDS | POS | 28 Jun 2021 |
CRUDE OIL | NEU | 07 Jul 2021 |
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