Weekend Strategy Review June 26, 2022
Posted by OMS at June 26th, 2022
The indexes continued to push higher on Friday, completing the final sub-waves of wave 2 up within Wave 3 down. The Dow finished with a gain of 823 points, closing at 31,500. In Thursday’s Comments, I said that it could rise to the 31,400 level or so before wave 2 up completed. The extra 100 points was a bit more than I expected, but retracement waves always seem to exceed their projected targets. This one was no exception.
Anyhow, if wave 2 up is still not complete after Friday’s rally, I would be very surprised. If there is any remaining bullish potential, it should exhaust near the 31,700+ level. That’s the level where a theoretical 0.618 retracement of Wave 1 down would complete. I would not expect the Dow’s Bearish Rising Wedge Pattern or double zig-zag to go much beyond this level.
The same can be said about the Russell 2K which has its annual re-balancing on Friday. Much of Friday’s volume was caused by the addition of 45 companies to the Russell 1000, causing the index managers to buy/sell shares to reflect the new additions. In other words, a lot of what happened on Friday was artificial so all the Russell’s portfolios, the 1,000, 2000 and 3,000, will be in proper alignment for Monday’s open. From a pattern perspective, the RUT appears to have completed retracement wave 2 up on Friday. If not, it could rally to fill the gap near the 1,780 level. If the move is extended, a rally to 1,800 +/-, should do the trick. After that, the RUT should begin wave 3 of Wave 3 down which should be the most intense portion of the Bear Market decline.
BTW, if you have money in some of the foreign markets, you might want to pay attention to what’s happening overseas. In the past few weeks, all of the gains accumulated in the past 7 years of Germany’s stock market (the DAX), have been erased. Canada’s TSX has dropped almost 39 percent. My chart shows a decline to the 8,000 level is possible. This would be a 60 percent decline for the TSX.. France (CAC) is down 22 percent so far in 2022. Now trading near 6,000, the charts suggest 2,500 to 2000 is possible. The chart of the Russian Trading System, (RTS), currently near 1,486, shows it could decline to 200. Japan’s Nikkei 225, is already down 34 percent this year. Currently trading near 26,500, the lower channel support line, which is my target, is near the 6,000 level. Bottom line for the international markets is that they could be going a lot lower. And if the foreign markets tank, the U.S markets will be right behind them. The charts are showing a clear and present danger for the foreign markets this weekend. Please be careful with your money.
The Dean’s List and the Tide are neutral.
The Market Timing Indicators on the Dow, NASDAQ, and RUT have turned neutral. remain negative. The same indicators for the S&P (SPY) remain negative.
The Scalp Trading Indicators on the Dow, S&P (SPY), and NASDAQ (QQQ) have turned positive. The RUT is neutral.
The Sector Ratio strengthened to 4-20 negative. The top four strong sector were Retail (6), Telecoms (2), Household Products (1) and PharmaBio (0). The top five weak sectors are Media (-7), Energy (-5), Material (-6), Real Estate (-6), and Service (-5). Continue to avoid these weak sectors as they will likely lead the market lower as Wave 3 down unfolds.
My Doctors Trade with TZA is still on a Red Arrow, so I’m out of the trade and on the side-lines waiting for the next Green Arrow. BTW, the Red Arrow took us out of the trade at 50.56. Yesterday, TZA closed at 42.87 so we avoided 7.69 points of loss by paying attention to the Red Arrow.
Students should continue to watch the trade next week as TZA continues to form the ‘Blade’ of a large Hockey Stick pattern. With a 17.45 point ‘Stick’, I’m a buyer on the next Green Arrow.
Still no change in my comments on Bonds, crypto, or gold. I still don’t see any reason to own them now.
My Best Bets for next week continue to be the inverse index ETFs. All I’m doing now is waiting for Green Arrows to appear on SDOW, SQQQ, and TZA.
Have a great weekend.
That’s what I’m doing.
h
Market Signals for
06-27-2022
DMI (DIA) | NEG |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | NEU | 24 Jun 2022 |
NASDAQ | NEU | 24 Jun 2022 |
GOLD | NEG | 21 Jun 2022 |
U.S. DOLLAR | POS | 13 Jun 2022 |
BONDS | NEU | 17 Jun 2022 |
CRUDE OIL | NEG | 22 Jun 2022 |
CRYPTO | NEG | 08 Jun 2022 |
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