Weekend Strategy Review April 30, 2023
Posted by OMS at April 30th, 2023
Stocks rose sharply on Thursday and continued higher into Friday. The Dow gained 792 points in those two days, reversing the losses from the sideways trading of the previous two weeks. On 13 April, the Dow was trading at 34,029. On Friday, the Dow closed at 34,098. It appears that Wave ‘d’ down ended with Wednesday’s low of 33,325 and Wave ‘e’ up is now underway.
In my last update, I discussed the possibility of a Wave ‘e’ rally. I said, ”At this point, it’s still not clear if the top is in or whether the trading action we’ve seen for the past few days is the completion of Wave ‘d’ down within the Ending Diagonal Pattern with Wave ‘e’ up still to come. We should know in a few days. If the market begins to rally today, there is a good chance that it will continue to rally into the Fibonacci Cluster Turn Window scheduled for 1-10 May.”
So now that we have seen the Dow rally for 792 points, it’s pretty clear that Wave “e’ up is underway and should continue into the 1-10 May Fibonacci Cluster Window. The question on the table now is…how high will the Dow likely go?
I believe that there are two possibilities. The first is the area near the 34,528 level. If this happens, then Wave ‘A’ would be equal tin length to Wave ‘C’. The second possibility is a run to 35,170. A move this high is theoretically possible, but right now I don’t believe there is enough time for a run of this magnitude. I’m more concerned about the turn window, and I don’t see how a move above 35,000 would be possible given the short time available. So for now, I’m going to stick with 34,568. I’m not sure if he Dow will move even this high as it could top anywhere between 34,110 and 34,568.
The NASDAQ and the Russell 2K are a lot weaker than the Dow and S&P. My current projection for the S&P is near the 4,195 level. For the NASDAQ, I’m using a high of 13,342. This is obtained by drawing a trend line through the 2 February and 4 April highs. It should provide strong resistance.
BTW, one of the reasons I’m watching for a trend change if the indexes meet the targets mentioned above is because of the lack of breadth. The generals are still charging ahead, but the troops are simply not following. For example, if you look at the weighted S&P500, as of Friday, two stocks…Apple and Microsoft, accounted for slightly over 14 percent of the gain in the S&P’s push to a new high. If you add four more stocks into the mix…Google, Amazon, Facebook, and Nvidia, they account for slightly over 25 percent of the gain. That’s incredible! In other words, one out of every four dollars that moving into the S&P (the market) are going into just 6 stocks. That’s about the thinnest breadth I’ve ever seen. So, please be careful as we move into the next major Fibonacci Turn Window. Based on the past performance of these turn windows, I MUST give them my highest respect. You should too.
As of Friday’s close, the Market Timing Indicators on the cockpit for the Dow and NASDAQ have turned positive.
The Dean’s List remains neutral, as the ETF for shorting the Russell is still on the List. The Tide has turned positive.
The Sector Ratio strengthened to 6-18 negative after Friday’s session. The top five strong sectors were Healthcare (2), Household Products (1), Foods (1), Computers (1), and PharmaBio (0). The top five weak sectors were Retail (-10), Banks (-7), Energy (-3), Autos (-3, and Transportation (-3).
My Trades: I didn’t trade yesterday. Yesterday was moving day for us as we transferred from the ship to our hotel. Because we fly home early Tuesday morning, my next update will be on Wednesday morning, 3 May. If something unexpected happens before then, I’ll let you know. But for now, I’m just looking for a continuation of the rally into the targets mentioned above.
If we start approaching these targets, and I see some of the indicators on the 60 min bars begin to turn negative, I’ll start buying a few inverse index ETFs, starting with TZA, SQQQ, and SPXU. I want to have something short on overnight, even though I might be a bit early. This is one time I’m not too concerned about having a short term loss.
Have a great weekend,
That’s what I’m doing,
h
Market Signals for
05-01-2023
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 27 Apr 2023 |
NASDAQ | POS | 27 Apr 2023 |
GOLD | POS | 26 Apr 2023 |
U.S. DOLLAR | NEG | 26 Apr 2023 |
BONDS | NEU | 14 Apr 2023 |
CRUDE OIL | NEG | 26 Apr 2023 |
CRYPTO | NEU | 27 Apr 2023 |
DISCLAIMER
As always, the Professor never makes recommendations. The information is provided on an educational basis so you can have informed discussions with your financial advisors and/or accountants about your individual investment decisions.
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, Weekend Strategy Review