Professor’s Comments June 18, 2020
Posted by OMS at June 18th, 2020
The market was mixed yesterday. The Dow finished with a loss of 170 points, closing at 26,120. The NASDAQ was up 15 points while the SPX lost 11 points. Volume on the NYSE was extremely light, coming in at only 67 percent of its 10-day average. There were 57 new highs and 0 new lows.
The Dow still appears to be in the final stage of competing corrective Wave 2 up of Major Wave C down. Once Wave 2 up completes, the Dow should begin an impulsive decline for Wave 3 down, a move that should take it to significantly lower levels. It’s possible that yesterday’s decline was the start of Wave 3 down, but not likely. My primary scenario is that the flat to sideways trading we’ve seen for the past two day is part of sub-wave 4 of the Wave 2 pattern. If this analysis is correct, then the Dow should rally and slightly exceed the 26,611 level to complete sub-wave 5 of Wave 2 up before impulsive Wave 3 down begins. This should happen within the next few days.
The Market Timing Indicators for the Major Indexes remain Positive.
The Dean’s List is Positive while the Tide remains neutral.
The Sector Ratio remains at 24-0 Positive after Wednesday’s session. The top 5 strongest Sectors were Energy, Material, Autos, Retail and Consumer Products.
Gold and the miners were flat yesterday. GLD rose 0.31 cents to 162.56. The overall pattern for gold still appears to be a wave 2 entrancement. Gold is retracing in a sideways pattern while the miners (HUI) appear to be in a 3-3-5 flat. Students should continue to watch and trade gold to the downside because once the wave 2 pattern completes, gold should resume its upward course. The next move up could be explosive, but before that happens, the HUI should trade down to the 220-240 level. Yesterday the HUI closed at 261.26, down 0.1 cents.
BTW, the reason I want my students to start paying attention to gold and the miners now is because of its explosive potential. Here’s the thing: IF, and its still a BIG IF, the HUI does trade down below 220, it sets up a pattern where the gold miners index could easily double within the next year or so. My target for the miners is the 400-450 level.
The level students should be watching on the HUI is 260. That’s because the neckline of a small Head & Shoulders Pattern is at that level. The ‘Head’ of the pattern is at 300. So, IF the HUI breaks below 260, the pattern suggests a target near or below 220. This is the reason why I’m been shorting GDX and scalping DUST for the past few days. I’ll continue my shorting strategy with the miners in the days ahead, taking all short (or inverse) signals on my new Scalp Trading indicators.
Another pattern I’m watching closely now is Crude Oil. Crude appears to be completing Wave 1 of a Bullish Pattern that should take it significantly higher. But like gold, it probably needs to correct first. That correction should take the form of an a-b-c pattern that should see it trade below the 20 level before all three waves of the pattern are complete. West Texas Crude is currently trading near 36. If the timing signals on Crude turn negative, the Model will be buying a few shares of SCO, the inverse ETF for West Texas Crude.
The Model is currently holding 400 shares of DUST and a lot of cash. It continues to look for opportunities to buy shares of inverse index ETFs and now SCO, the inverse ETF for Crude Oil. These purchases could begin within the next few days, especially if the Dow trades closer to the 26,611 level.
With yesterday’s flat market in gold, I had a tough time generating a profit. Thankfully, the late day decline in gold enabled me to go home with a small profit of $214, so it wasn’t a totally wasted day. The trade was only a 60-70 percent odds trade but because I was showing zero profit on the day, I took it anyway. We’ll see what happens today. Keep your eye on HUI 260.
I’ll be doing another free follow-on training session this morning for students who took my Scalp Trading Class. I still have 2 seats available, so if you purchased the class or video and want to attend the training session, let me know. The training room opens just before 9am.
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
06-18-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 16 Jun 2020 |
NASDAQ | POS | 16 Jun 2020 |
GOLD | NEG | 16 Jun 2020 |
U.S. DOLLAR | NEU | 16 Jun 2020 |
BONDS | NEU | 17 Jun 2020 |
CRUDE OIL | NEU | 16 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