Professor’s Comments June 30, 2020
Posted by professor at June 30th, 2020
The market rose yesterday on weak volume. The Dow finished with gain of 580 points, closing at 25,596. The NASDAQ and SPX were up 117 and 44 points, respectively. Volume on the NYSE was light, coming in at only 83 percent of its 10-day average. There were 46 new highs and 2 new lows.
Yesterday’s rally was the alternate scenario in the chart I posted this past weekend. The rally should be close to completion as I do not expect the gap that starts at the 26,000 level on the Dow to be filled. If that gap were filled, it would mean that the Dow would likely trade back to the 26,500 level before Wave 2 up is complete, but I believe the odds for this are low. Reversal gaps are strong resistance levels, and after yesterday’s low volume rally, it would take an extraordinary effort on the part of the Dow to move much beyond yesterday’s close. Because of this, I will be looking for opportunities to establish short or inverse positions on any negative turn in the short-term bars. A close below the 25,000 level in the days ahead should send stocks reeling. My target for the next leg down, Wave 3 of Major 3 down, is below the 23,000 level with 22,800 or below likely. Because this should be a wave 3 of 3, the move down should be impulsive and happen quickly once the 25,000 level is broken.
The Market Timing Indicators for the Major Indexes are mixed after yesterday’s session. The Dow is Negative, but the NASDAQ remains Positive. However, yesterday Bloomberg posted an unusual chart that showed the combined MONTHLY Put/Call ratio of the five FANG stocks was at 2.79, which is the highest level since the February high. As most of you know by now, there is significant divergence between what the FANG stocks are doing and the rest of the market. The fact that these five stocks have reached EXTREME conditions again should be taken as a major warning.
The Dean’s List is Positive while the Tide remains Neutral. The Hi-Lo indicator is keeping the Tide Neutral.
The Sector Ratio strengthened to 21-3 Positive after Monday’s session. The top 5 Strongest Sectors were Autos, Energy, Retail, Material and Cap Goods. The three Weak Sectors were PharmaBio, Telecoms and Semiconductors.
The Model continues to hold 800 shares of DXD, 400 shares of DUST and a lot of cash. It continues to look for opportunities to buy shares of inverse index ETFs IF the market moves higher. These purchases could begin within the next few days, especially if the Dow starts to decline below the 25,000 level.
Gold and the miners rose fractionally yesterday and its possible that gold (the metal) is breaking out of its Bullish flag pattern and is about to rally to the 1,900 level as Wave 3 up unfolds. On the other hand, it still appears that mining stocks are forming wave ‘b’ within a complex Wave 2 pattern that still needs one more down leg to go. It’s still not clear if the miners are going to follow gold higher or make one more run lower, toward the 220-240 level. We should know within the next few days.
I received an email from Gene S. yesterday updating the statistics since his initial trades with my new Scalp Trading System. Because many of you know Gene, I thought I’d share his email with you this morning. Here’s the email:
Professor, I’m writing this email to again thank you for sharing your system and let you know how much I enjoy the process and results. My overall stats are 44 winners and 14 losers, or 75.86%. But since going 7 winners and 10 losers in my first 17 attempts, I have gone 37 to 4 (90.24%) after the follow on training and re-watching the video. I also have made $5,183 this month! Due to this success, I’m going to increase the amount I invest per trade, and as a result hope to make more money. I have traded individual stocks, but mainly I’m trading ETFs. I try to focus on the areas you highlight in your write-ups.
Congratulations and thanks Gene! If I’m right and the Dow begins to fall below the 25,000 level, hopefully you’ll be able to keep your string of 90%+ successful trades going. Wow!!!!
That’s what I’m doing.
h
BTW, if you purchased my Scalp Trading Course recently and would like to attend one of my follow-on training sessions, let me know and I’ll send you and invite.
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.
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
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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