Professor’s Comments June 26, 2021
Posted by OMS at June 29th, 2021
Stocks were mixed again on Monday, with the Dow falling and the S&P and NASDAQ rising. The Dow finished with a loss of 150 points, closing at 34,283. The large cap index is essentially at the same place it was over two months ago. The S&P and NASDAQ finished with gains of 10 and 140 points, respectively. Volume on the NYSE was light, coming in at 89 percent of its 10-day average. There were 150 new highs and 17 new lows.
Yesterday’s large decline on the Dow was the big move predicted by Friday’s small change in the A-D Oscillator.
The non-confirmation between the Dow and the S&P and NASDAQ I discussed last week remains intact. Yesterday’s decline on the Dow was consistent with the start of a wave 3 decline if Friday’s high was the end of wave 2 up of Wave 3 down. If it’s not and wave 2 up is not finished, the overall pattern is still consistent with a wave 2 retracement if the Dow stays below its 1 June high of 34,849.
The patterns on the S&P and NASDAQ look like they still have a bit more work to do before they complete. The S&P could gave completed sub-wave 3 up of a five wave sequence yesterday. If that’s the case, it should start a small decline today back to the 4240 level before making its final sub-wave 5 rally to about 4300. Yesterday, the S&P closed at 4291. A close below the 18 June low of 4164 would suggest the trend has changed from up to down.
The pattern on the NASDAQ appears consistent with a five wave Ending Diagonal that is in its final wave. Wave 4 of the pattern ended on 14 May at the 13,002 level. Wave five up has now exceeded the Wave 3 high, so it’s possible that Wave 5 ended yesterday at the 14,500 level. A five wave impulsive decline now would strongly suggest that Wave 5 up is complete, and a new set of down waves is starting.
The Market Timing Indicators on the Dow turned Neutral after yesterday’s decline. The Timing Indicators on the S&P and NASDAQ remain Positive.
The Scalp Trading Indicators for the Dow (DIA)also turned Neutral yesterday, as the volume indicator turned negative. The momentum remains positive, but just barely. The ST indicators on the S&P (SPY)and NASDAQ-100 (QQQ) remain Positive.
The Dean’s List remains Positive. The Tide remains Negative. It would be EXTREMELY unusual for the current rally in the S&P to continue with a negative Tide (breadth).
The Sector Ratio weakened to 14-10 Positive after yesterday’s session. The top 5 strong sectors were Energy with an RS rating of 2, Service (2), PharmaBio (2), Financial (1), and Semiconductors (1). The top five weak sectors were Transportation (-2) Banks (-1), Material (-1), Foods (-1), Telecoms (-1). Continue to watch for increasing weakness in the Sector Ratio as the week progresses.
Model Update: There were NO Changes to the Model. It remains 100 percent in cash.
Top Stocks: Three D Systems (DDD), the Top Stock from last Friday’s Member’s Watch List gained another 0.76 cents in yesterday’s mixed market. Workhorse WKH) the #2 stock gained 1.35 points yesterday to 16.8. Dillard’s, the #3 stock gained 1.19 points. So once again, even though the Dow was down 150 points, the three Top Stocks were all winners. BTW, in case you’re wondering how the Top Five stocks fared, #4 EC was down 0.26 points, and #5 DECK was up 1.71 points. So, 4 out of the top 5 were winners. Again, if you’re looking for a stock to trade while the indexes complete their patterns, just go to the MWL. Workhorse was the stock to trade yesterday as the ‘Horse’ bolted from the starting gate just after the open. The early signals from the ST indicators showed the race was on with an entry at 15.69. Five bars later (on the 10’s) the sprint was over (volume trigger) with an exit anywhere between 17.26 and 18. In other words, about 2 points in 40 minutes. Not bad!
Once again, the ‘List’ told you what stock to trade; the ST indicators told you when to enter and exit the trade.
Gold: It’s starting to look like the decline in gold is not complete. The action during the past 4 days looks to be more like the completion of a sub-wave 4 up than anything else. If I’m correct about this, gold could decline to about the 1730 level before the pattern is complete. Yesterday, gold closed at 1779.
Bonds: The Timing Indicators on Bonds have turned Positive. The yield chart I monitor suggests Bond yields are about to start a wave 5 decline that could take them down to the 2.75 level. TMF remains on the Dean’s List, and if it stays on the List, it suggests the rally in Bonds will continue. BTW, TMF made for a nice easy trade on the 10 min ST bars yesterday. With Bonds at a cross-road in its pattern, we could see a lot of volatility in Bonds in the days ahead, so students might want to keep an eye on TMF as a day trade. I’ll be using the ST indicators on the 10 min bars, buying whenever the bias is positive and the volume gives say so.
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
06-29-2021
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 28 Jun 2021 |
NASDAQ | POS | 07 Jun 2021 |
GOLD | NEG | 08 Jun 2021 |
U.S. DOLLAR | POS | 16 Jun 2021 |
BONDS | POS | 28 Jun 2021 |
CRUDE OIL | POS | 21 Jun 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