Professor’s Comments March 28, 2023
Posted by OMS at March 28th, 2023
Stocks were mixed yesterday in choppy to sideways trading. The Dow finished with a gain of 195 points, closing at 32,432. The NASDAQ was down 55 points; the S&P was up 7. Volume on the NYSE was weak, coming in at 76 percent of its 10-day average. There were 34 new highs and 34 new lows.
Not much changed after yesterday’s session and my comments are similar to those poster in the WSR. It still appears that the Dow and S&P are in the process of completing wave ‘c’ up of an a-b-c pattern for sub-wave 2 up. Once this retracement wave completes, stocks should begin a series of stair step declines that will drop them to fresh lows. For the Dow, the decline should consist of least 3 significant declines as the various degrees of the wave 3s unwind. In other words, the Dow could be setting up for a sub-wave 3 decline within a minor wave 3 decline that is within a Wave 3 decline of a Major Wave 3 Bear Market decline. BTW, once these declines are complete, the Dow should be trading below the 13 October 2022 low of 28,660.
One of the reasons I believe the market is headed a lot lower is because a clear Head and Shoulders Pattern is developing on both the Dow and S&P. The H&S on the S&P has been developing since January 2023. It has a neckline near the 3,875 level. If this neckline is broken, with a distance from the ‘Head’ to the neckline of 310 points, my target for the decline is near 3,565. I’m going to say below the 3,600 level. Yesterday, the S&P closed at 3.978.
In other words, protect yourself!
The Dean’s List is neutral. The Tide has turned neutral.
The Market Timing Indicators for the Dow are still neutral. The same market timing indicators for the NASDAQ remain positive.
The Sector Ratio stayed at 2-22 negative after Monday’s session. The top two strong sectors were Semiconductors (2) and Cap Goods (0). The top five weak sectors were Banks (-10), Retail (-6), Energy (-5), Autos (-5) and Consumer Products. Students should continue to note how the Banking Sector remains under extreme pressure. Not good!
My Trades: The Bias on all the indexes I was watching out of the gate were positive, so not wanting to trade the long side I waited. My one (and only) opportunity for a trade came at the 10:10 mark when a confirmed Green Arrow appeared on SQQQ. The techs were not trading as strong as the other indexes yesterday and their recent run-up looked like the completion of wave ‘c’ of Wave 2 up, so I was interested. Anyhow I wanted to do something on the short side, so I took a chance and pulled the trigger. My ‘trial’ lot was purchased once I noticed the rising Bias near 32. Then once I saw SQQQ was entering the trend mode, I bought a few more shares at 32.16. I exited the trade when the Red Arrow appeared at 33.14.
BTW, one of the reasons I’m looking hard at SQQQ now is because of my significantly lower targets for the NDX. Yesterday, the tech heavy index closed at 12,673. If I’m reading my charts correctly, the NDX should test the January lows near 10,700 on the next leg down. I also bought a few shares of SARK yesterday for our IRAs.
One of the things I’m watching: Keep an eye on a 30-min chart of SQQQ. Right now, both the Bias and Volume are positive, but the ETF is still on a Red Arrow. If SQQQ generates a Green Arrow in the days ahead, I’ll add a few shares to my position. In other words, I’m using the 30s to increase my position.
That’s what I’m doing,
h
Market Signals for
03-28-2023
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 24 Mar 2023 |
NASDAQ | POS | 16 Mar 2023 |
GOLD | POS | 10 Mar 2023 |
U.S. DOLLAR | NEU | 09 Mar 2023 |
BONDS | POS | 10 Mar 2023 |
CRUDE OIL | NEG | 10 Mar 2023 |
CRYPTO | POS | 13 Mar 2023 |
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