Professor’s Comments September 2, 2021
Posted by OMS at September 2nd, 2021
The market was mixed again yesterday. The Dow lost another 48 points, closing at 35,3312. The NASDAQ and S&P rallied to new highs, gaining 50 and 1 point, respectively. Volume on the NYSE was moderate, coming in at 109 percent of its 10-day moving average. There were 186 new highs and 19 new lows.
For the past 8 trading days, the Dow has basically traded sideways while the NASDAQ and S&P rallied to a new all-time high. The sideways pattern on the Dow suggests it is either a small wave 4 or a ‘b’ wave of an a-b-c pattern. Either pattern should result in higher prices.
If I measure the distance from the 19 August low to 30 August high and add it to yesterday’s low, it projects a top closer to the 35,900 level. This is about 100 points higher than the 35,700 to 35,800 level I have been projecting. However, this rally to a top does not have to happen as the final wave of either pattern can truncate. I still believe the market will top sometime between now and 10 September +/- a week if it hasn’t already topped earlier this week in the aftermarket hours.
One of the reasons I say this is because the Scalp Trading Volume Indicator on the daily chart of the Dow is currently negative. So as a minimum, if a rally is to occur, the volume indicator needs to tun positive. If it does turn positive with the current pattern, the Dow could easily push another 500 points higher from current levels. On the other hand, a close below 34,690, the 19 August low, would suggest the Ending Diagonal Pattern on the Dow is complete.
The market could still get a boost from the positive bias usually associated with the Labor Day Holiday Weekend.
The Market Timing Indicators for the Dow have turned Neutral. The same indicators on the S&P and NASDAQ remain Positive.
The Scalp Trading Indicators for the Dow (DIA) have turned Neutral. The ST Indicators on the S&P (SPY) and NASDAQ (QQQ) remain Positive.
The Dean’s List and Tide remain Positive.
The Sector Ratio weakened to 16 – 8 Positive after yesterday’s session. The top five strong sectors were Food Drug (2), Semiconductors (2), Household Products (2), Telecoms (2) and Insurance (2). The five weakest sectors were Energy (-4), Autos (-2), Foods (-1). Transportation (-1) and Service (-1).
Model Update: There were NO Changes to the Model. It is still 100 percent in cash.
Top Stocks: Once again, I traded the two Bitcoin miners and GBTC for nice gains again yesterday. I passed on the early pop and then had to wait until just before noon on MARA before the ST indicators turned positive. The wait was worth it as the stock popped over 2 points from my entry. I exited the stock when the momentum stopped trending. RIOT was pretty much the same story. An entry just before noon led to a one-point profit. When the indicators on the Dow turned negative just after 1pm, I shorted RCL, my go-to short, for another one-point profit. I also shorted GDX at 12:30 for another point. All the above-mentioned trades can be clearly seen on the 10 min bars. BTW, I did not take any of the long trades highlighted by my tend algorithm. I wish I did! I simply forgot about them, being so focused on the crypto and gold miners. AAPL produced a nice early trade before dropping with the market. AWR opened positive and kept moving higher all day for a 2-point gain. The negative ST indicators on LULU and REMX would have kept me out of the trade. The algorithm did not highlight any new trend trades last night.
Because of this I plan on staying with the Bitcoin miners today. The pullback in Bitcoin that occurred from 19 March into 23 July still looks like a Major Wave 4 correction. The bounce from 23 July low into yesterday still looks like the initial waves of Major Wave 5 up. If I’m right and Bitcoin is starting Major Wave 5 up,trading the miners and GBTC could be the best game in town. It could last for months, with the cryptos pushing toward new highs. Right now, the daily ST indicators on GBTC remain positive, so with high cover on the daily’s, and with MARA still at the top of the MWL with an RS ranking of 10, you know what I’m trading. I’m just looking for entry points.
Gold: The indicators on gold (the metal) remain positive, while the same indicators on the gold miners remain negative. This is creating a major dilemma for me as I look for opportunities to short the miners. Maybe this will come next week? Right now, the metal looks like it wants to rally to the 1,830 level before pulling back to 1,765. Yesterday gold closed at 1,815. So, I’m going to be patient and watch for a rally to 1,830 before shorting the miners. BTW, the reason I am following gold and the miners so closely now is because IF gold does pull back to the 1,765 level, I see it as a Major Buying opportunity. Gold could go to 3,000 or higher in the years ahead.
Bonds: Not much changed with Bonds. I’m still waiting for confirmation that the current wave 4 up retracement is complete. Be patient and wait for a signal change. TMF, the positive ETF for Bonds is still mid-pack on the Dean’s List. I want to see TMF drop off the List and see TBT, the inverse Bond Fund appear. That will be my signal to short Bonds. The inverse Bond trade could be a nice longer-term trade, especially for my IRA.
That’s what I’m doing,
h
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
Market Signals for
09-02-2021
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 31 Aug 2021 |
NASDAQ | POS | 23 Aug 2021 |
GOLD | POS | 27 Aug 2021 |
U.S. DOLLAR | NEG | 23 Aug 2021 |
BONDS | POS | 30 Aug 2021 |
CRUDE OIL | NEG | 31 Aug 2021 |
CRYPTO | POS | 20 Aug 2021 |
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