Professor’s Comments April 28, 2015
Posted by OMS at April 28th, 2015
After an early pop, the Dow fell 42 points, closing at 18,038. Volume was heavy, coming in at 142 percent of its 10-day average. There were 95 new highs and 14 new lows.
Yesterday’s decline caused 3 out of 4 of the breadth indicators that make up The Tide negative. So with the Summation Indicator, A-D oscillator and Hi-Lo oscillator now negative, The Tide is now neutral.
Yesterday’s decline also caused the Coach on the Dow (DIA) to turn negative. The Coach is my primary Money Flow indicator for large cap stocks. When it turns negative, it tells me that money is now leaving the Big Cap, international stocks.
For the past few weeks, I have been talking about some of the research I have been doing using the Summation Index in combination with The Coach.
What I’ve been trying to do is find an early trigger for stocks that are being highlighted by Emeritus for the Honor Roll.
When the market starts to develop a top, not all stocks top at once. Some start to roll over early, months before it apparent that a major top is being formed. This topping process is something that I wanted to take advantage of during the weeks ahead, and is why I have been spending so much time on trying to determine which indicators perform best when used as an early trigger.
I believe I have found what I was looking for. I will be presenting the results of this research in an Update Class on Wednesday night at UNF. BTW, Valerie tells me that although the current Class is sold out, she could move the Class to a larger classroom if necessary. So If you have not signed up yet, I recommend that you call Valerie this morning to do so. I believe that you be amazed by the information I will be presenting.
Basically what I will be showing you on Wednesday night is how stocks from the Honor Roll can be traded successfully on both a short-term and intermediate term basis, several days before it is apparent that the overall market has rolled over. This way short positions can be established in selected stocks even though the Dow and NASDAQ continue to chop higher.
What I have been able to do is identify high probability trades that will give you a ‘head start’ on any intermediate turn in the market, both up and down.
The triggers I’m using are the Summation Index and the Coach. So when I see both of these indicators turn negative, as they are now for the Dow (DIA), I start to look for shorts from the Honor Roll. But I don’t take all of the shorts, just the Big Cap ones. I don’t want to short any of the NASDAQ stocks yet, because the Coach on the NASDAQ (QQQ) is still positive.
Remember that Emeritus, the algorithm that I use to generate the Honor Roll, is a trend algorithm. So the stocks that he highlights have a high probability of trending. So once I know that money is starting to leave a particular market, like the Dow, AND I see a preliminary indication that the breadth is turning negative (Summation Indicator on the NYSE turns negative), I can start to take early positions.
This is exactly what I have been doing for the past few weeks with stocks like PHM, RYL, AXP, LSTR, CNI and others.
BTW, the above trading strategy does NOT replace my primary trading strategy where I look for ETFs to trade from the Dean’s List when The Tide changes. All it does is gives me a way to catch a few early stocks before the market rolls over.
Yesterday’s scalp trade in RGLD was good for about a half point before the PT indicators on the 5s turned negative. IF Royal turns Green today, I’ll look for another scalp on the 5s. The reason I’m interested in gold now is because gold (the metal) appears to be the process of bottoming. It’s still very early in the process, but all of the moves I have been looking for in GLD have been happening. I felt that GLD needed one more leg down to the 113-114 level before starting to rise. This has happened, as yesterday GLD popped over 2 points back to 115+. The P-volume and Money Flow also turned Green as the ETF continues to form a nice Hockey Stick pattern.
The next 1-2 days will be critical to gold’s future as the Fed meets to discuss its policy on interest rates. Depending on how the market interprets the Fed’s policy, we could see GLD rally and perform a ‘Rope Jump’ above the 118 level. If this happens, it would tell me a lot about the future direction of gold.
So with the Fed’s announcement scheduled for 2pm tomorrow, I will be watching for additional signs that market is turning negative. When I checked in with The Professor last night, he had 12 shorts and only 1 long. Those 12 shorts are not enough for me to get excited about, but the fact that he only had one long tells me things could be changing.
If this is happening, the Big Cap stocks on the Honor Roll sould be very interesting trades on the shorter term bars.
That’s what I’m doing,
h
Market Signals for 04-28-2015 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments