Professor’s Comments March 22, 2022
Posted by OMS at March 22nd, 2022
Three days after raising interest rates only 0.25 percent because he considered inflation under control, Fed Charman Powell changed his mind. Yesterday, he said the Fed will probably begin increasing rates a half percent starting in May and continue to raise rates at 0.50 percent for the next year. The market liked what Powell said last Wednesday and rallied, but didn’t like yesterday’s comments, so it fell. The Dow lost 202 points, closing at 34,552. The NASDAQ and S&P were down 55 and 2 points, respectively. Volume on the NYSE was light, coming in at 83 percent of its 10-day average. There were 118 new highs and 61 new lows.
From a technical perspective, yesterday’s decline appeared to be sub-wave 4 down of the rally that started on 15 March. This rally is part of wave ‘c’ up, which should be a five wave move within Wave 2 up. In other words, one more rally, sub-wave 5 up, should complete the five-wave sequence. The rally could start today.
Also, yesterday’s early rally on the S&P filled the gap from the close on 16 February. So, while the Dow probably needs to rally another 100-200 points in the next 1-2 days, this doesn’t have to happen with the S&P. I’ll be looking to buy SPXU when a confirmed Green Arrow appears on the 4-hour bars.
BTW, Powell’s indecisive comments yesterday will likely exacerbate the volatility we’re seeing in the markets. After they foolishly increased the money supply eight-fold in the last 22 months, the Fed is now worried about inflation. Really? The Fed’s confused and aggressive tactics will almost certainly bring on a full-blown recession. I don’t see how one can be avoided. I say this is because history shows the last three times the Fed increased interest rates, it led to two painful recessions, one slowdown, and two crashes in the stock market. Like I said in the WSR, the Fed is no longer a friend to the equity markets. Now they’re saying unemployment is no longer their main concern, now its inflation. ‘Bout time they took their head out of the sand!
Please take all necessary precautions to protect yourself.
After Monday’s action, the Dean’s List and The Tide are positive.
The Market Timing Indicators for the Dow and S&P are positive. The same timing indicators for the NASDAQ are neutral.
The Scalp Trading Indicators for the Dow, S&P, and NASDAQ are positive.
The Sector Ratio weakened to 8-16 negative after Monday’s session. The top five strong sectors were Energy (7), Material (4), Cap Goods (1), Healthcare (1) and Insurance (1). The top five weak sectors were Autos (-8), Household Products (-6), Consumer Products (-3), Semiconductors (-3) and Technology (-2).
My Doctor’s Trade in TZA generated a Green Bar as its last bar on Monday. So, if you’re trading the TZA /TNA combo, the appearance of the RED BAR on TNA, the appearance of the Red Bar was your signal to exit that trade. Since TNA generated its Green Bar, on 16 March, the trade is up 8.91 points. In other words, for those students trading the TZA/TNA combination, you can tack on another 15 percent to a trade that has already gained over 170 percent since November. My doctor friends in Jacksonville should be really liking this trade by now :>) I’m sure their patients are happy too.
I really don’t have much to say today about Cryptos, Bonds, or gold today, mainly because they too appear to be finishing patterns. The Market Timing Indicator for Crypto flipped back to Neutral yesterday and Bonds are still Negative. I don’t think we’ll see much of a change in any of these three asset classes until Wave 3 down in equities begins. I’m on the side lines for now.
That’s what I’m doing,
h
Market Signals for
03-22-2022
DMI (DIA) | POS |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 17 Mar 2022 |
NASDAQ | NEU | 21 Mar 2022 |
GOLD | POS | 25 Feb 2022 |
U.S. DOLLAR | POS | 18 Feb 2022 |
BONDS | NEG | 21 Mar 2022 |
CRUDE OIL | POS | 18 Mar 2022 |
CRYPTO | NEU | 17 Mar 2022 |
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