Professor’s Comments March 16, 2021
Posted by OMS at March 16th, 2021
The markets staged a late rally on Monday, with the Dow pushing to a new high of 32,973 level before closing at 32,953. In my WSR, I mentioned that the Dow would likely test 32,950 during wave 5 up making wave 5 equal to 0.618 times the previous wave 1. So, as expected, this rally to a new high has occurred. In a perfect world, the Dow should pull back slightly today for a micro sub-wave 4 and then rally into the Fed Meeting on Wednesday to complete the pattern.
The NASDAQ also rallied to 13,460.35 yesterday which met the requirements I discussed in the WSR by moving slightly above last Thursday’s high of 13,434. So, it too could use a slight pullback today before rallying tomorrow. Tesla (TSLA) also moved higher yesterday, but only reached an intraday high of 713.18 before pulling back to close at 705.7. It’s still possible that TSLA could rally to the 742 level to close the gap formed on 24 February, but it better accomplish this before 2pm tomorrow. Otherwise, the markets could become under pressure and its chances for a move back to 740 will start to become slim. The thing I’m watching for now on the short-term bars is for a five wave decline to start after tomorrow that will drop the index below 13,000. If this happens, it will be a good indication that Wave 2 up has ended and Wave 3 down is underway. BTW, IF the current retracement wave on the NASDAQ exceeds 13,600, it means that the decline from the 16 February top to the 5 March low is NOT a Wave 2, but more likely a Wave 4. In the Wave 4 scenario, the NASDAQ will likely rally to a new high. This is the reason why I’m a little troubled about TSLA not retracing to the 740 level. It’s still possible that a late retracement in the stock could spark a Wave 5 rally to new highs in the NASDSQ.
BTW, Yesterday’s rally was predicted by Friday’s small change signal in the A-D Oscillator.
Students should continue to note that there is an official Hindenburg Omen on the Board. This means that once the current rally phase completes, the probability for a general market crash remains high.
The Market Timing Indicators on the Dow remain Positive. However, the same Timing Indicators on the NASDAQ remain Negative. The Scalp Trading Indicators on the DIA are Positive while the same indicators on the NASDAQ (QQQ) remain Negative.
The Dean’s List remains Neutral. The Tide remains Positive.
The Sector Ratio weakened to 23-1 Positive after Monday’s session. The top 5 strong sectors were Retail, Service, Media, Energy, and Autos. The one weak sector was PharmaBio. Continue to look for changes to the Sector Ratio as the week progresses.
Model Update: There were NO Changes to the Model. It remains 100 percent in cash. Remember, the Model is based on the NASDAQ-100 (QQQ) and right now the Q’s remain on a Sell Signal.
Top Stocks: I received an email from Steve H. yesterday asking about gold and mining stocks. Steve has been watching them carefully and is also starting to see signs of life as they begin to form a possible bottom. Because of this, Steve was wondering if its time to start buying a few miners. Hmmm? Here’s what I’m doing: Without a signal in gold (the ST Indicators are still on Sell Signals), it’s hard for me to even think about gold stocks now. I do not try to catch falling knives. And with negative volume and momentum indicators, that’s exactly what gold stocks are now. So No, I am not buying gold now. What I want to see (as a minimum) is for gold to continue its rally, then pullback to form a ‘Blade’ of a Hockey Stick. Then I want to see several gold and mining stocks start to appear on the Member’s Watch List. That’s not happening now. Gold and silver mining stocks are still all over the Weak List, mixed in with stocks like WKHS, TSLA, and AAPL. So, with most indexes looking like they could top in the next few days, (that’s my primary scenario for now— as long as the NASDAQ stays below 13,600), I’m not looking to trade any stocks now, even the top stocks from the MWL. If the market begins to roll over and gold stocks catch a serious bid, that’s when I’ll start looking at gold and the miners. Not now. There’s still a good chance that gold could fall to the 15,600 level if 1,670 does not hold.
Bonds: Same for Bonds. I’m just waiting. The time for Bonds will come, but as long as the equity indexes continue top rally, their time has not arrived. Be patient. Bonds are also a falling knife now. I know it’s very tempting to be thinking about buying bonds now, especially after you look at a chart of TMF. It’s horrible! But horrible charts can get even worse. The momentum indicator on TMF is still in the Trend Zone. As a minimum, I want to see the ST volume indicator start to turn positive AND the momentum indicator move out of the TZ. Until this happens, Bonds remain a poor bet. Continue to watch Bonds.
That’s what I’m doing,
h
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
03-16-2021
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 08 Mar 2021 |
NASDAQ | NEG | 01 Mar 2021 |
GOLD | NEG | 08 Jan 2021 |
U.S. DOLLAR | POS | 09 Mar 2021 |
BONDS | NEG | 27 Jan 2021 |
CRUDE OIL | POS | 11 Nov 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