Weekend Strategy Review November 13, 2022
Posted by OMS at November 13th, 2022
Stocks chopped around for most of the day yesterday with the indexes finishing higher. After being down over 300 points early in the day, the Dow closed 32 points higher at 33,747. It got as high as 33,817. The NASDAQ and S&P were up 209 and 37 points, respectively. Volume on the NYSE was 11,2 billion shares, which was about 500 million shares less than the previous day’s volume. There were 81 new highs and 35 new lows.
Yesterday’s high on the S&P was 5 points from being an exact Fibonacci retracement of wave 1 down. It was one of the levels (4007) I mentioned as a possible target in Friday’s early Comments. The other target level is the large gap between 4,037 and 4,110 made on 12 September. Several students sent me emails yesterday noting the large negative divergences that were developing on the momentum indicator on the shorter-term bars. Momentum is one of the indicators that needs to be watched closely now for a possible turn. That turn could happen early next week, as 15 November +/- one day is another possible Fibonacci turn date.
From a pattern perspective, the S&P, RUT, and NASDAQ are forming complex double zig-zag patterns. The outlier is the Dow, which is forming a relatively simple 3-3-5 flat, in which the final fifth wave has five waves up. This is the reason I’m watching the Dow very closely now, as its patterns suggests it could be very close to being complete.
Also, if you’re interested in counting waves, you might take a quick look at the Dow’s daily chart. Since wave 2 up started on 30 September from the 28,715 low, you can clearly count five waves up into yesterday’s high. The fifth wave of the pattern started from the 3 November low of 31,727. It could have completed with yesterday’s Bearish Hammer Top candlestick. Hammer candlesticks normally mark bottoms, but this one is different. This candlestick is Bearish is because yesterday’s open was 50 points above its close. The pattern is also sometimes called a ‘Hanging Man’. The term speaks for itself.
The Dean’s List and The Tide are positive.
The Market Timing Indicators for the Dow are positive. The same timing indicators on the NASDAQ are also positive.
The Sector Ratio was 4-20 positive after Friday’s session. The top five strong sectors were CapGoods (10), Semiconductors (8), Energy (5), Leisure (4), and Financial (4). The top four weak sectors were Healthcare (-1), Telecoms (-1), Retail (0) and Utilities (0).
My Trades: I was on the side lines for most of the day yesterday. The 4-min Bias on the major indexes was mixed, so I watched and waited. I also noted that the only index with a steady positive Boas was the SPY. But while the Bias was positive, it was also showing negative divergence as it approached the 4,000 level. So, when a Red Arrow appeared just before the close, I bought a few 20 January SPY Puts with a strike of 345. That’s all I did on Friday.
Next week: I want to see how the indexes react to my potential targets. If the S&P does not exceed Friday’s high, I’ll look to establish a few positions in TZA and SQQQ. Again, these are the weakest indexes. If the market starts down, I’ll be watching to see if the decline is impulsive. If it is, I’ll pay close attention to last Thursday’s low. A break of this low would be tell me that the market has reversed direction and Wave 3 down is underway. I’ll get aggressive below 32,487 on the Dow; 10,780 on the NASDAQ, and 3,860 on the S&P.
Have a great weekend.
That’s what I’m doing,
h
Market Signals for
11-14-2022
DMI (DIA) | POS |
DMI (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | POS |
Index | Signal | Signal Date |
---|---|---|
DOW | POS | 04 Nov 2022 |
NASDAQ | POS | 10 Nov 2022 |
GOLD | POS | 10 Nov 2022 |
U.S. DOLLAR | POS | 27 Oct 2022 |
BONDS | NEU | 27 Oct 2022 |
CRUDE OIL | NEG | 10 Nov 2022 |
CRYPTO | NEG | 10 Nov 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