Professor’s Comments November 22, 2022
Posted by OMS at November 22nd, 2022
Not much happened in the market yesterday. Stocks were mostly lower on light, pre-holiday volume. Thursday is Thanksgiving Day in the U.S. and markets will be closed. I will post a few brief Comments tomorrow morning, Wednesday, and then the WSR on Saturday. Saturday’s WSR will also be brief because Marcia and I will be leaving for Germany to visit the Christmas Markets. During my trip, I will try to stay with my regular posting schedule but will only be updating the Lists on days when I post Comments.
Last week I discussed the possibility of 15 November as being an important turn date. So, with the market trading lower yesterday, the indexes remain below their 15 November highs. We’ll see if this continues for the rest of the week and into December, which historically is an extremely volatile month. My current plan is to start getting short using inverse index ETFs and Put options as we move into December.
Yesterday. the Dow fell 45 points to close at 33,700. The NASDAQ and S&P were down 122 and 15 points, respectively. Volume on the NYSE came in at 82 percent of its 10-day average. There were 53 new highs and 59 new lows. Yesterday was the first day in weeks that the number of new lows exceeded the new highs. However, it was still not enough to turn the Hi-Lo indicator negative.
Nothing changed with the pattern. It still appears that the Dow is completing sub-wave 5 up of Wave ‘c’ up in a Bearish Rising Wedge or Ending Diagonal Pattern for Wave 2 up. If I’m correct about this, the next wave down should be an impulsive, dramatic, sell-off for Wave 3 down. It’s also possible that the pattern truncated on 15 November and the top is in.
The NASDAQ and RUT appear to be completing a corrective 3-3-5 Double Zig-Zag Pattern for Wave 2 up. Yesterday, the volume indicator on the daily chart of QQQ and IWM turned negative. So now, both the Q’s and IWM are on confirmed Red Arrows. However, the Bias has not rolled over yet. Be patient.
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 have turned neutral. I need to see these indicators turn negative before I start getting aggressive with my inverse index ETFs. Right now, I’m just scalping TZA and SQQQ and not holding overnight. But that could change depending on what happens today.
The Sector Ratio strengthened to 4-20 positive after yesterday’s session. The top five strong sectors were CapGoods (7), Semiconductors (5), Leisure (4), PharmaBio (4), and Energy (4). The top four weak sectors were Telecoms (-1), Utilities (0), Retail (0) and Healthcare (0).
My Trades: I caught two small trades in TZA and one in SQQQ yesterday for a gain of about 70 cents total. The trades weren’t anything special, just enough to get paid for the day. The 10:10 trade on TZA’s 4 min bars was obvious, as the early Bias was positive and rising. The only problem was that even though the indicators looked great, the ETF only gained 20 cents before a Red Arrow appeared. Immediately after the trade I had a feeling that the low pre-holiday volume would cause stocks to trade in a narrow range. So instead of trading stocks, I started searching for Put options. I decided to use the 17 March contract on QQQ with a strike price of 225 paying between 3.05 and 3.17 per contract.
For today: I’m still watching for signs that the current rally is tiring. The Q’s and RUT still appear to be the weakest indexes so that’s where I’ll be focusing. If the market pops early today, I plan to buy a few a few shares of SQQQ to hold in our IRA’s. I believe that anything below 47.30 is a fair price. Yesterday, SQQQ closed at 47.24. So today, I’ll be looking to scalp trade both SQQQ and TZA in our regular accounts AND looking to buy a few shares of SQQQ to hold in our IRAs. I’m also holding the QQQ Put options mentioned above in my IRA.
That’s what I’m doing,
h
Market Signals for
11-22-2022
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 | NEU | 21 Nov 2022 |
GOLD | NEU | 21 Nov 2022 |
U.S. DOLLAR | NEG | 14 Nov 2022 |
BONDS | POS | 16 Nov 2022 |
CRUDE OIL | NEU | 21 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