Professor’s Comments September 23, 2021

Posted by OMS  at September 22nd, 2021

I don’t have much to add to yesterday’s quick comments. Yesterday’s 339-point rally on the Dow still appears to be part of a retracement sub-wave 4. If sub-wave 4 extends and has five wave sub-waves, it could trade up to the 34,500 level before it completes.  After that, sub-wave 5 down should begin to unfold, dropping the Dow down to the 33,200 +/- level to complete Wave 3 down.

I found it interesting that the Dow transports did not participate in yesterday’s snap back rally and instead, closed lower. It’s not a good sign when the Dow Industrials rally 2.5 percent and the trannies boycott the party. I view the EXTREME divergence between the Dow Industrials and the Transports as a significant warning.

If the Dow does continue to rally today, I’ll start looking for opportunities to get short. Once again, I’ll be watching the Scalp Trading Indicators on the short-term bars.

The Market Timing Indicators for the Dow, S&P, and NASDAQ remain Negative.

The Scalp Trading Indicators for the Dow (DIA), S&P (SPY), and NASDAQ (QQQ) also remain Negative.

The Dean’s List is Neutral. The Tide remains Negative.

The Sector Ratio strengthened to 4-20 Negative after yesterday’s session. The four strong sectors were Semiconductors (1), Insurance (1), Telecoms (0), and Banks (0).

The five weakest sectors were Consumer Products (-2), Real Estate (-2), Transportation (-1), Household Products (-1), and Service (-1).

Model Update:   There were NO Changes to the Model. It is still 100 percent in cash.

Top Stocks:  With a pattern that suggests a wave 4 retracement is in progress and DXD, the inverse ETF for the Dow still on the Members Watch List, I’m not doing a lot of trading to the upside. Knowing that the Fed Meeting was scheduled for 2pm yesterday, I ignored the Scalp Trading indicators on the 10 min bars of the Dow which were screaming at me to get long. Oh well…

BTW, I will be adding two new issues to the data base for the MWL and DL this weekend.  The first is a stock called Coinbase (COIN). The company is listed on the NASDAQ and is America’s No. 1 centralized cryptocurrency exchange. It aspires to be a one-stop shop for all things crypto. If you own crypto, odds are that you are already a customer. Besides Bitcoin, the company trades more than 80 listed cryptos and 244 trading pairs. As a crypto broker, it doesn’t matter if the currencies are moving up or down, as long as investors trade the cryptos and pay the transaction fees, the company will make money. One of the reasons I’m adding the stock to the data base is because I feel it’s relatively cheap. With a P/E ratio of 18, its less than half the P/E of an average NASDAQ stock.

The other issue that will be added this weekend is ETHE, an ETF for Ethereum. Many people feel that Bitcoin is turning into a store of value, like gold, and will not be widely used in commerce. Whereas Ethereum is starting to look more useful as it is currently the largest smart contract platform. It presently hosts the most decentralized finance (DeFi) applications, the most stable coin transactions and the most transactions on the blockchain. Why is this important? Well, simply put, DeFi replaces conventional banks, bankers and brokers with smart contracts and programmable money. Now anyone, regardless of status, location, religion, or ethnicity, can participate in the money lending and banking process, something that was only previously available to the wealthy and privileged in many countries. With Ethereum, all you need is a cell phone and an internet connection. This is a BIG DEAL as most of the world’s population are unbanked.  Today, there are over 4.5 billion people with cell phones. This is more than 1.5 billion people who have access to indoor plumbing! The potential for these people to have digital bank accounts, so they can save, lend, and exchange money, start businesses, etc, is massive. By adding Ethereum to the data base for the Dean’s List, and COIN to the data base for the MWL, students will now have an opportunity to compare the strength of the two leading crypto currency ETFs, Bitcoin (GBTC) and Ethereum (ETHE) and COIN with other stocks and ETFs currently in the data base. I will be adding other crypto currencies and other crypto related stocks to the data bases in the future, after I have an opportunity to do the appropriate research.

My timing indicator for the crypto currencies is currently negative as the ongoing correction continues. This is one area that students might want to pay attention to once the indicator turns positive, especially now that a perfect storm for inflation appears to be on the immediate horizon for the U.S.

Gold:  Gold (GLD) fell 0.62 cents yesterday to 165.42. The Timing Indicators for gold remain Negative. I’m patiently watching for signs that the next major wave up is starting. It still appears that the decline since the 3 September high in gold is a corrective a-b-c pattern. If this is the case, the next rally in gold could take it to new highs. Again, watch for the timing signal to turn positive.

Bonds:  TMF gained 0.49 cents yesterday, but I’m still neutral on Bonds. The pattern remains unclear, which is keeping me on the sidelines.

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

09-23-2021

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