Professor’s Comments November 15, 2022
Posted by OMS at November 15th, 2022
Stocks rose early, then closed lower during yesterday’s session. The Dow finished 211 points lower, closing at 33,536. The NASDAQ and S&P were down 127 and 36 points, respectively. Volume on the NYSE was moderate, coming in at 92 percent of its 10-day average. There were 54 new highs and 24 new lows.
It still appears that the Dow is completing a large 3-3-5 flat pattern for corrective Wave 2 up. This corrective wave started from the 17 June low. It is correcting the Wave 1 decline that started in early January 2022. Once Wave 2 up completes, Wave 3 down should begin. This wave should be a powerful, impulsive, decline that drops the Dow down to the 26,500- 28,000 level or lower. One of my upper targets for the Dow was the 34,000 level. Yesterday at its high, the Dow reached 33,964, so it is possible that Wave 2 up is complete.
Yesterday, the S&P also reached and slightly exceeded my lower target level of 4007 getting as high as 4009. The 4007 level is an exact Fibonacci 0.62 retracement of Wave 1 down. So, it’s also possible that Wave 2 up on that index is complete.
The Russell 2K did not confirm the latest rally high on the Dow and S&P, so it’s possible the RUT completed its double zig-zag pattern for Wave 2 up last Friday.
It’s still way too soon to conclude that Wave 2 up on all the major indexes is complete, but the negative divergence I’m seeing on all the indexes suggests that a major top is near. Other signs, like yesterday’s reversal day on the Dow and Friday’s Bearish Hammer Top also suggest the market could be setting up for a reversal. Also, today, is a potential turn date, so the market could reverse within one or two days. No guarantees.
That’s because the Dean’s List and The Tide are still positive.
The Market Timing Indicators for the Dow are positive. The same timing indicators on the NASDAQ are also positive. I need to see these indicators turn neutral to negative before I start moving off my mostly Bullish stance.
The Sector Ratio weakened slightly to 5-19 positive after Monday’s session. The top five strong sectors were CapGoods (10), Semiconductors (6), Energy (4), Leisure (4), and PharmaBio (4). The top five weak sectors were Healthcare (-2), Telecoms (-2), Retail (-1), Consumer Products (-1) and Utilities (0).
My Trades: I was on the side lines for most of the day, watching. But when the Dow and S&P reached my initial upside targets just before the 2pm mark, I started buying the Green Arrows on TZA and SQQQ that appeared shortly after. The combination of reaching potential targets and a rising Bias triggered the purchases. These were followed by purchases of SDOW, SARK, and SPXU which I rode into the close. Once the Bias turned positive on the 4-min bars of the inverse index ETFs I was trading, I became aggressive and adder to my initial purchases. It turned out to be a nice trading day. I also re-established the 20 January SPY Puts with a strike of 345 in my IRA.
Today’s trades: Yesterday’s late decline was impulsive, so I want to see if it continues. If the market bounces early and runs out of steam, I’ll look to trade TZA and SQQQ which are the inverse ETFs for weakest indexes. I’ll be looking to trade these ETFs if the underlying does not exceed yesterday’s high. In other words, for today at least, I’m assuming that the market has already topped and is in the process of forming its initial waves down. I can not assume this IF the indexes continue to make new highs. All I’ll be doing is watching the Bias on the 4-min bars. If the Bias is positive AND RISING on TZA and SQQQ, I’ll buy a few shares. Same for SPXU, SARK and SDOW, in that order. I’m out on a Red Arrow. Still no holding overnight. I still believe that it’s too early to be holding overnight or getting aggressive.
That’s what I’m doing,
h
BTW, I had a great session with George H. on Sunday. George’s initial few questions turned out to be many, especially when we discussed the importance of the Bias as they relate to the Arrows on the longer term bars. Because of this, I decided to extend my Black Friday, name your price offer, for another few days. Offer is only available to students who purchased the Arrows Class. Just send me an email if you are interested.
Market Signals for
11-15-2022
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 04 Nov 2022 |
NASDAQ | POS | 10 Nov 2022 |
GOLD | POS | 10 Nov 2022 |
U.S. DOLLAR | POS | 27 Oct 2022 |
BONDS | NEU | 27 Oct 2022 |
CRUDE OIL | NEG | 10 Nov 2022 |
CRYPTO | NEG | 10 Nov 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