Professor’s Comments June 16, 2020
Posted by OMS at June 16th, 2020
The market fell hard at yesterday’s open, then spent the rest of the day recovering its losses to finish higher. The Dow finished with a gain of 158 points, closing at 25,763. The NASDAQ and SPX gained 137 and 25 points, respectively. Volume on the NYSE was low, coming in at 86 percent of its 10-day average. There were 27 new highs and 6 new lows.
Wave count: After last week’s classic Island Reversal, completing Major Wave B up, the Dow fell 1,8,60 points on Thursday to start Major Wave C down. Friday’s rally and yesterday’s early move down were waves a up and b down of Wave 2 up. Yesterday’s late rally was the start of wave c up within Wave 2 up. It should continue today and complete near the 26,000-26,300 level. Once Wave 2 up completes, the Dow start begin an impulsive Wave 3 down of Wave C down that should take it below the 18,000 level, with significantly lower levels possible.
The Market Timing Indicators for the Major Indexes are Neutral.
The Dean’s List and The Tide turned Neutral after yesterday’s session.
The Sector Ratio stayed at 24-0 Positive. The top 5 strongest Sectors were Energy, Leisure, Autos, Materials and Media. If the Dow approaches the 26,000+ level today, I’ll begin looking to establish ‘trial’ positions in inverse leveraged ETFs on any weakness in the short-term market timing indicators.
Gold fell hard at yesterday’s open but then rallied into the close. The Models initial gain in DUST was wiped out by the close. If you were scalping DUST, you booked a nice gain, as much as 2.65 points, and then remained on the sidelines for the rest of the day. If not, DUST is now showing a small loss from its initial purchase price. If gold rallies along with the market today, I’ll look to re-establish the shares of DUST I traded yesterday in my own account. The pattern on the HUI still suggests lower prices with a target near the 220-240 level.
Like I said in my WSR, this week should be about preparation. Students should be thinking about how they’re going to trade the next leg down of the current Bear Market. Last week’s Island Reversal and Thursday’s subsequent plunge should NOT be ignored. This is the classic way major waves down within a Major Bear Market begin. The initial move down (Thursday’s plunge) is always followed by a sequence of corrective waves up…like the ones we saw on Friday, Monday and likely today. Then once these corrective waves complete, the markets start to plunge again. The corrective waves are happening now. They are NOT the start of a new Bull Market. Again, prepare yourself. Once the Dow completes Wave 2 up, and begins to move lower, watch the 25,565 level. That’s the level where its 200-day moving average is located. It’s the level where the institutions will begin dumping stocks in earnest. This is what happens in Wave 3 down. As I say in Class, institutions NEVER like to hold stocks trading below their 200. NEVER! So once the Wave 2 rally completes, pay attention to the 25,565 level, and watch what the smart money is doing.
There were no changes to the Model after yesterday’s session. The Model continues to hold 400 shares of HUI and a lot of cash. If the Dow rallies back to the 26,000 level, the Model will look to establish positions in inverse index ETFs.
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
06-16-2020
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 08 Jun 2020 |
NASDAQ | NEU | 11 Jun 2020 |
GOLD | NEU | 03 Jun 2020 |
U.S. DOLLAR | NEG | 03 Jun 2020 |
BONDS | NEU | 11 Jun 2020 |
CRUDE OIL | NEG | 11 Jun 2020 |
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