Professor’s Comments – Trading Plan for the Week 9/26/2022

Posted by OMS  at September 26th, 2022

During the weekend, Kate G. sent me an email asking for my short term targets for the four major indexes plus the symbol I use to trade Bonds.   I thought I would share my response to Kate with you plus a few notes (reminders to myself) that I put together as I prepare for the week. The notes have my short-term and longer- term targets that will guide my trading into early October.

Market has now lost about $13 Trillion since the crash of 2022 started.   Mortgage rates have doubled, now the highest rate in 20 years.  Loss of $13 Trillion plus higher interest rates will cause recession, possibly depression in U.S.

Knee-jerk Fed still trying to reduce balance sheet that mushroomed to over $6 Trillion in 1 & ½ years. Irresponsible Fed and supply shortages are primary causes of current inflation problem.  Latest interest rate increase of 75 basis points will likely cause market crash. Do NOT fight the Fed! Ride the horse.

Markets have started a 3 wave waterfall decline after forming a Major Rounding Top Pattern. 28 September is a key turn date.  First low could occur on 28 September, near 27,000 to 27,500.  After that, could see 24,000 -25,000 by early October.  Period near 6-7 October is a Phi Mate turn date.  Look to trade inverse index ETFs from Dean’s List.

Initial downside target for H&S Pattern on S&P is near 3,500.  Target for Wave 3 down is near 2,800.  S&P now down about 24+ percent from January top.   S&P could drop 70-80 percent from January top before decline completes.  Has potential to decline to 2,200 to 2,400 longer term.

NASDAQ-100 (NDX) H&S Pattern has downside target near 10,400, which is my current target for Wave 3 down.

Wave 3 down target for IWM is slightly below 150.

If Dow rallies before falling, rally could carry to 29,700 -29,800 level. Short any rally.

Silver close to finishing Wave 4 bottom.  Gold still working on handle part of Cup & Handle Pattern.  Handle is Wave 2.  Wave 3 up to follow once complete.  Could carry gold to the 3,000 level.

Dollar finishing Wave 5 of Wave 1 up.  Could drop from 112 level to 80 in Wave 2.  Look to buy UDN on Green Arrow.

West Texas Crude looks to be finishing Wave 4 down.  Crude is currently near 79.  Could rally toward 140-150+. Something significant is happening with crude that suggests major disruptions in supply coming.

Watch for bottom in Bonds.

Email response to Kate who asked for Bond Fund Symbol and short-term targets for the four major markets: 

– Symbol for bond fund is TMF.  

– Short term target for the S&P is the gap at 3509, then 3445, then 3310. All levels are where S&P gapped. Because S&P has not traded below Wave 1 low yet, unlike the Dow, possibly for a rally is stronger on this index.

– Short-term target for the NASDAQ is between 10,550 and 10,590. The latter is a .62 percent retracement of the earlier wave 5. 

– ST target for RUT s between 1530-1540.  Again, this is a .62 retracement of the earlier Wave 5.

– I talked about the targets for the Dow in my WSR.

TWID,

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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.