Weekend Strategy Review September 11, 2022

Posted by OMS  at September 11th, 2022

In my last update, I discussed how the Dow would likely rally above the 32,000 level to complete sub-wave ‘c’ of retracement wave 2 up.  My targets were between 32,164 to 32,289 levels. Yesterday, the Dow reached a high of 32,227 before pulling back to close at 32,150, a gain of 377 points.  The NASDAQ and S&P were also up 250 and 72 points, respectively. Total volume on the NYSE was less than 10 billion shares, which was the lowest volume of the week.  Large rallies on lower volume coming at the tail end of a retracement move are a sign of an exhausted market.

Yesterday’s rally appeared to complete a classic 3-3- 5 retracement flat in all the major indexes.  If I’m correct about this, the indexes should start sub-wave 3 of Wave 3 down early next week.

I’m staying in Exeter, a small old Roman city in the UK today from where we will see some of the places of interest in northern Cornwall. The 5-hour time difference makes it difficult to trade (and write my Comments).  However, when we finally arrived at our hotel yesterday, the market was still open, so I started buying shares of SDOW and TZA.  I also bought a few November 270 DIA Put Options with a strike price of 270. If the market starts to move lower next week, as I expect, I will add to these positions on any short-term rallies. I will also be looking to buy shares of SQQQ, SPXU and a few shares of SARK.

I still believe that Wave 3 down will end somewhere between the 26,500 and 28,000 level, so I’m not too concerned about getting ‘perfect’ entry points.  All I’m doing now is looking for ‘reasonable’ places to get short.  If I’m right about the upcoming Wave 3 down, perfect entries won’t matter much.  I believe its time to start getting short.

That’s what doing,

h

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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.

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