Professor’s Comments June 2, 2020
Posted by OMS at June 2nd, 2020
The indexes rose moderately yesterday, continuing to form their consolidation triangles. The Dow finished with a gain of 92 points, closing at 25,475. The NASDAQ and SPX gained 62 and 11 points, respectively. Volume on the NYSE was low, coming in at 85 percent of its 10-day average. There were 50 new highs and 5 new lows.
Yesterday’s rally appeared to be a continuation of wave 4 up within Wave C up of Major Wave B up. Wave 4 up should continue for another day or so trading between 25,300 to 25,700. Once all five waves of the triangle are complete, the Dow should begin to break above 25,700 and test the 25,865 level, with 26,000 possible.
My upside target for the SPX, currently at 3055 remain near 3300-3350. My target for the NDX, currently at 9552 is 9800 – 9850. The Russell 2K (IWM) appears to be the weakest of the lot, currently at 140, has a target between 146 -150. I expect the small cap index to be the first of the major indexes to turn negative. Incidentally, my downside target for IWM is near or below the 90 level, so I’ll be paying close attention to the Russell 2K as it has multiple inverse ETFs available. To give you an idea how hard the small caps were hit…. back on 19 February, IWM was trading at 169.14. A month later it was at 95.69. So even though my target on the next downturn is 90 or below, I wouldn’t be surprised to see IWM trade closer to 70 before the bear is over. Pay close attention to the Scalp Trading Signals on IWM during the next few weeks. Like I said, the Russell 2K should be the first index to turn negative, followed by the NASDAQ.
The Market Timing Indicators for the Major Indexes remain Positive.
The Dean’s List and The Tide also remain Positive.
The Sector Ratio stayed at 24-0 Positive after yesterday’s session. The fact that all 24 sectors of the S&P remain positive continues to bode well for higher prices. The top 5 strongest Sectors were Material (includes gold) Energy, Cap Goods, Healthcare and Leisure.
Gold (GLD) rose 0.75 yesterday to 163.66. The pattern still appears unclear, but it’s starting to look like the past week or so of sideways trading is a consolidation triangle. If this is the case, gold could begin to move significantly higher in the months ahead. On the other hand, HUI, the gold mining index, is still on a Neutral signal with a pattern that suggests lower prices. I’m avoiding gold until there is more clarity in the patterns.
Bonds pulled back yesterday with TBT, the inverse ETF for Bonds gaining 0.18 cents to 16.33. TBT is now flirting with its 50-day moving average at 16.66. If stocks rally in the days ahead, look for TBT to break above 16.66. Once this happens, the next target is the 200-day moving average currently at 21.77. BTW, the 18 March interim high of 21.13 is also an obvious target.
There were NO CHANGES to the Model after yesterday’s session. The Model continues to hold 600 shares of TBT, and 40 shares of UCO, with a cash balance of $87,037.
Yesterday was a relatively quiet day for me in the market. I had two scalp trades in DDM for a total of $310 in my regular trading account and $278 in my IRA. All I did was stay on the right side of the scalp trading indicators on the 4 min bars. At this point, I’m taking all positive scalp trades in DDM as I believe the downside risk is low. Today, I’ll be doing the exact same thing, trading DDM and TBT. Unless DDM begins to break out of its triangle, I will not hold it overnight. TBT is a different story because the closer it gets to its 50-day moving average, the more attractive it becomes.
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
06-02-2020
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 18 May 2020 |
NASDAQ | POS | 18 May 2020 |
GOLD | POS | 29 May 2020 |
U.S. DOLLAR | NEG | 29 May 2020 |
BONDS | NEG | 01 Jun 2020 |
CRUDE OIL | NEU | 19 May 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