Weekend Strategy Review October 31, 2021

Posted by OMS  at October 31st, 2021

The markets closed higher on Friday after a choppy session.  The Dow finished with a gain of 89 points, closing at 35, 819.  It was up 142 points for the week.  The NASDAQ was up 50 points on Friday and up 408 points for the week.  Tesla (TSLA) was the main reason for the NASDAQ’s gain as it was up 204 points for the week.  The rally in TSLA pushed it into the #1 position on the Member’s Watch List.

In Wednesday night’s Update Class, I discussed how the Dow was likely in final Wave 5 up and appeared to be developing either an Ending Diagonal or Bearish Rising Wedge Pattern that would likely end near the 36,000 to 36,500 level.  The reason I said this was because Ending Diagonals are the most common pattern for a final Wave 5 up. However, after watching yesterday’s action, I’m not so sure anymore.  That’s because yesterday’s intraday rally to 35,852 was slightly less than the 26 October high of 35,892.  So, it’s possible that the decline from 35,892 into Wednesday’s low of 35,490 was a Wave 1 down and the 3-wave rally into yesterday’s high was retracement Wave 2 up.  At this point, we just don’t know.  But if this Wave1/2 scenario is taking place, the markets should begin to decline hard on Monday. My target in this potential scenario is once again the 34,800 level. A decline below 34,800 would confirm that the Dow has made its final top and that a new Bear Market is underway.

One of the reasons I’m discussing this potential scenario today is because of Friday’s breadth and volume.  It was pretty weak. The NYSE A-D ration closed at 0.87:1.  In other words, more stocks declined on Friday than advanced.  Same for the volume as 65.6 percent of the volume was to the downside.  That’s pretty unusual to see on a day when all of the major indexes closed higher.  Anyhow, Monday could be an interesting day.  If the Market doesn’t drop on Monday and pushes past Friday’s high of 35,892, it will negate the Bearish scenario and the Bullish case will remain in tack.  

The Market Timing Indicators for the Dow (DIA), S&P (SPY), and NASDAQ (QQQ) remain Positive.

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

The Dean’s List and the Tide remain Positive. However, I should mention that the Up-Down Oscillator is barely positive at this point.  This is a hard indicator to turn.  It has been positive since 5 October supporting the current rally and is now on the fence.   

Also, there was a ‘relatively’ small change in the A-D oscillator on Friday, so we could see a BIG MOVE within the next 1-2 days.

The Sector Ratio strengthened to 20-4 Positive after yesterday’s session. The top five strong sectors were Energy (7), Autos (4), Semiconductors (3), Service (3), and Banks (3).

The four weak sectors were Media (-1), Technology (-1), Foods (-1), and PharmaBio (0).7

Top Stocks:  I spent most of Thursday re-doing the recording of Wednesday night’s Update Class on the ‘Arrows’.  Dave now has the new video and should have it posted later today for your review and reference.  

Anyhow I got back to trading yesterday.  All I did was pick a few stocks from Thursday night’s Lists and watched for Green Arrows to appear.  Talk about simple!  When I saw a confirmed Green Arrow, I jumped on the trade and rode it until I saw a Red Arrow.  There was one or two trades where I exited on the Safety Valve. I traded three stocks and ETF for a really nice gain.  And you wonder why I raised the price?  If you missed the Class, don’t sit on the side-lines and wonder…get the Class.  So, you made a mistake…. Big Deal.  We all make mistakes.  The bigger mistake is in not getting the Class so you continue to miss out in the future.  Are you really going to continue to miss the trades being highlighted by the arrows?

For example, using the 15 min bars…. First Solar (FSLR) was at the top of Thursday’s MWL. It opened at 116.87 on a confirmed Green Arrow.  The stock went to a high of 120.90 before a Red Arrow took you out.  The Safety Valve would have taken you out at 119. 

What about COIN in the #2 position?  It also opened on a Green Arrow at 319.11.  The stock rose to an intraday high of 326.5 a Red Arrow took you out.  The Safety Valve would have had you exit at 324.42. 

And finally, MARA… my favourite miner.  It started the day at the # 3 position on the MWL.   The stock opened the day to the downside on a Red Arrow (what JOY), and then generated a Green Arrow at the 11am mark. I entered the stock as soon as I saw the arrow was confirmed near the 50 level and rode it until the Safety Valve took me out at 52.42 for a gain of 2.4 points. On 500 shares, that’s $1,200!

I also traded a few shares of XPDI on its second Green Arrow of the day.  This was another easy trade as the Big Green Arrow told me to buy just under 12 and the Safety Valve took me out at 12.41.  I passed on the final Green Arrow 45 min before the close.  If you bought the Class, you can the trades and keep learning.

Remember what I said about the miners, especially something like Marathon. The miners are forming a sideways triangle now.  They’re resting.  That’s what happens after they make a big move up.  They form triangles and rest.  So, here’s the deal:  As long as MARA holds the lower trendline of its triangle, now near 50.20, everything is OK.  That’s why I bought the stock on Friday when I saw it fall to 49.81 and hold its lower support line.  That’s what stocks are supposed to do when they’re in a triangle.  So now that I know that the support has held, I’ll be looking for MARA to break above 53.34 next week.  If it does, the ‘stick’ that formed from its 29 September low of 30.55 to the 20 October high of 56.48 is about 26 points.  That’s a lot of points!  You can make the projection to a target…just add the 26 points to the 22 October low of 47.37.  Anyhow, those potential 26 points are more than enough to pay for the Arrow Class many times over if it happens.  So, you KNOW what my strategy is for next week. I’ll be watching MARA, a few other Bitcoin miners, and GBTC.   If I start to see Green Arrows, I’m in. 

BTW, you know that I have been urging many of my doctor and professional friends to trade longer time periods, like the 60s and 120s.  So, IF you have the time this weekend, you might want to pull up a 30-day, 2-hour chart of a few of the crypto candidates, like MARA, RIOT and GBTC.  If you do, you should look at all the triangles that have formed on the cryptos.  Triangles typically occur in a Wave 4 and are followed by a Wave 5 up.  Triangles are EXTREMELY bullish patterns.  So, IF these stocks and ETFs start moving higher next week, watch for Green Arrows to appear.  If you don’t have the Arrows, get them.  If I’m right and the cryptos are starting a major Wave 5 up, you’re going to kick yourself in the pants if you miss out on this move.  Don’t be cheap.  Get the arrows.  You’ll be glad you did. 

Again, if you missed out and you send me an email saying the dog ate your ‘Arrows’ announcement email, I’ll believe you for this weekend only.  The price will be $199. After that, its $399.  I developed the arrows for you.  I really want you to have them.

Have a great weekend.

That’s what I’m doing.

h

Market Signals for

11-01-2021

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.