Professor’s Comments March 24, 2022
Posted by OMS at March 24th, 2022
Stocks fell hard yesterday in the first impulsive action we’ve seen in weeks. It’s possible that the top for wave 2 up is in. If this is the case, stocks should start to decline sharply from current levels with only minor retracements along the way.
The Dow finished with a loss of 440 points, closing at 34,358. The NASDAQ and S&P were down 186 and 55 points, respectively. Volume on the NYSE was low, coming in at 85 percent of its 10-day average. There were 82 new highs and 80 new lows.
In Tuesday’s comments, I discussed how the Dow would likely rally 100-200 points to complete sub-wave 5 up of wave ‘c’ up within Wave 2 up. The rally got as high as 34,882, which filled most of the gap from 16 February, but did not completely close it. Given yesterday’s impulsive decline, this might not happen. In this case, getting close, like in horseshoes and atom bombs, is probably enough. The wave count and structure of the double zig-zag pattern is classic and appears complete. Wave 3 of 3 down should be next.
However, at this point I still cannot be totally sure that Wave 2 up is complete. Even after yesterday’s impulsive decline, its still possible that the decline was a sub-wave ‘d’ down of wave ‘c’ of Wave 2 up. If this is the case, prices could rise during the next few days to complete wave ‘e’ up of Wave 2. As I’ve said many times before, Wave 2’s have a mind of their own. The can and do morph into complex variants of common patterns, but at the end of the day, they are still just a retracement wave. This one is no different.
If prices do rally during the next few days, students should watch the 34,880 level, as a move above that level on expanding breadth and volume would present other, more complex options for the pattern. But even if this happens, the next major move should be down.
Please take all necessary precautions to protect yourself.
After Wednesday’s action, the Dean’s List and The Tide remain 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 remain positive.
The Sector Ratio weakened to 12-12 neutral after Wednesday’s session. The top five strong sectors were Energy (5), Material (4), Insurance (2), Food Drugs (2) and Foods (1). The top five weak sectors Household Products (-4), Autos (-4), Consumer Products (-3), Semiconductors (-2) and Telecoms (-2).
My Doctor’s Trade in TZA generated a Green Arrow Buy Signal on yesterday’s first bar. The arrow was followed by another green candle; however, the Buy Signal has still not been confirmed by the volume and momentum. All I’m doing now is waiting for confirmation. Student should note that the bias indicator on the trade is still negative, and without a positive, increasing bias, the trade in TZA is probably not going anywhere for the next few days. Be patient.
Gold: GLD also generated a Green Arrow/green bar on the first 4-hour bar of yesterday’s trading. However, in this case, both the volume, momentum, and bias are positive, so the signal is confirmed. Gold appears to be in the process of completing the handle of a large bullish Cup and Handle Pattern. If this is the case, gold could be a nice place to be in the months ahead. I will be looking for to add shares of gold, silver, and mining stocks on any pullbacks in the weeks ahead. Gold closed at 1,946 yesterday. My longer-term target for gold is above the 3,000 level
BTW, the ETF I’m using to trade gold is UGL, a 2X positive leveraged ETF. The ETF moves a lot during the day and usually has a wide spread between bid and asked price, so use limit orders for entries/exits. I’m also using GDX to trade the miners. GDX has been flat-lining for the past week or so in what appears to be a sideways wave 4. The sideways movement appears to be the ‘Blade’ of a Hockey Stock Pattern. Student might want to take a closer look at the pattern on the 4-hour bars. If I’m right, GDX could see a 6–7-point pop as the next wave of the pattern unfolds.
I’m still not interested in Bonds or Cryptos. Maybe things will change once Wave 3 down in equities begins. I’m on the side lines for now.
That’s what I’m doing,
h
Market Signals for
03-24-2022
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 17 Mar 2022 |
NASDAQ | NEU | 23 Mar 2022 |
GOLD | POS | 25 Feb 2022 |
U.S. DOLLAR | POS | 18 Feb 2022 |
BONDS | NEG | 21 Mar 2022 |
CRUDE OIL | NEU | 22 Mar 2022 |
CRYPTO | POS | 22 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