Professor’s Comments September 29, 2022
Posted by OMS at September 29th, 2022
The market staged a strong relief rally yesterday from EXTREME oversold conditions. The Dow finished with a gain of 549 points, closing at 29,683. It reached an intraday high of 29,811 before pulling back. The NASDAQ and S&P were up 222 and 72 points, respectively. Yesterday’s rally was driven by a ton of short covering. Volume on the NYSW was moderate, coming in a 100 percent of its 10-day average. There were 12 new highs and 294 new lows.
In the WSR, I talked about how the market was EXTREMELY oversold and conditions were ripe for a relief rally. The rally started from Tuesday’s low of 28,958 and continued into yesterday’s high of 29,811. At this point, it’s not clear if the rally completed with yesterday’s high. There are two possibilities:
The first is that the rally to 28,811 was a wave 4 within Wave 3 down. If this is the case, the rally should be complete or nearly so, and the Dow should begin to fall today as wave 5 down starts to move toward the 28,300 level.
The second possibility is that yesterday’s rally was wave ‘c’ of an a-b-c move for sub-wave 2 up within Wave 3 down. If this is the case, wave ‘c’ up could continue to move a bit higher to fill the gap from the 22 September open near the 30,300 level. Once this gap is filled, the Dow should start another impulse wave decline to new lows. BTW, the gap on the S&P is near the 3,758 level.
In other words, in either case, once the market completes its current retracement rally, it should begin to move significantly lower.
I used yesterday’s rally to add to my existing positions in TZA, SDOW, SQQQ, and SPXU. I also bought a few shares of SARK, the inverse ETF for Cathy Wood’s ARK Fund. I also bought a few November 18 DIA Puts with a strike price of 260. I only plan to hold these Puts as a short-term trade.
I still believe that Wave 3 down is not even close to being over.
The Dean’s List and The Tide are still negative.
The Market Timing Indicators on all the major indexes are still negative.
The Sector Ratio stayed at 0-24 negative even after Wednesday’s strong rally. There were no strong sectors. The top five weak sectors are Consumer Products (-6), Material (-6), Media (-6), Semiconductors (-6) and Telecoms (-6).
I’m still watching Bonds, Gold, Silver, and the inverse Dollar (UDN) for signals. All have positive charts once the current declines complete. TMF rose 0,82 cents yesterday to 9.07. However, the Market Timing Indicators for the ETF are still on a Sell Signal. Wait for the signals to change.
I’m still not interested in anything crypto.
Continue to focus on inverse index ETFs from the Dean’s List
Bottom Line: The markets appear to be in the final stage of completing a relief rally from EXTREME oversold conditions. Once this rally completes, the market should fall to new lows. Continue to ride the horse.
That’s what I’m doing,
h
P.S. With hurricane Ian fast approaching, I got up extra early this morning to make sure these Comments got posted while I still have power. The next few days should be very trying as the sound of the wind and the pelting rain announce the cane’s arrival. If we lose power, I’ll try my best to get you updated. I fully understand that this is a very anxious time for most of you with money in the market and just as the first responders are out fixing power lines and rescuing stranded people, I take my job of keeping you informed just as serious. Stay safe!
Market Signals for
09-29-2022
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
Index | Signal | Signal Date |
---|---|---|
DOW | NEG | 15 Sep 2022 |
NASDAQ | NEG | 15 Sep 2022 |
GOLD | NEG | 26 Aug 2022 |
U.S. DOLLAR | POS | 23 Aug 2022 |
BONDS | NEG | 11 Aug 2022 |
CRUDE OIL | NEG | 15 Sep 2022 |
CRYPTO | NEG | 15 Sep 2022 |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments