Professor’s Comments April 29, 2015
Posted by OMS at April 29th, 2015
The Dow fell early, then turned around to close 72 points higher at 18,110. Volume was moderate, coming in at 103 percent of its 10-day average. There were 60 new highs and 16 new lows.
The Fed will announce its policy on interest rates at 2pm this afternoon. Fed days always have the potential to move markets, and this one is no exception. Any change in interest rate policy could trigger a Big Move.
At this point with the Dow at 18,110, I believe there is very little room to the upside, maybe a few hundred points. On the other hand, if the market interprets what the Fed has to say as negative, the decline could be nasty. It could trigger the start of a decline that could last for years.
There were several changes to the indicators and Lists last night, but none of them are conclusive.
The Summation Indicator and A-D oscillator turned positive, but The Tide stayed neutral because the Hi-Lo indicator remains negative. At this point I’m watching The Tide very closely because its breadth indicators have been flip-flopping for the past few days and are very close to turning negative. The A-D oscillator has been hovering close to the zero level for the past 8 trading days and just like the Summation Indicator looks like it wants to change direction.
As you know, I never like to trade against The Tide and now that it is showing signs of reversing direction and turning negative, I’m being very cautious with my trading now.
Last night, DIA dropped off the Dean’s List and TWM, the inverse ETF for the Russell 2000 appeared. These two changes are what caused the List to turn neutral. So now the only positive index ETFs on the List are the ones that tract the SPY and the NASDAQ.
The other change of note is that UUP, the ETF for the U.S. Dollar is now off the List and UDN, the inverse Dollar ETF has appeared. This is likely signaling that the long run in the Dollar is now over. As I mentioned previously, the pattern for the Dollar suggested that it would top near the 98-99 level. So now that this has happened, and with UDN showing positive PT indicators, the long awaited decline in the Dollar appears to be underway.
RGLD had a nice day yesterday, gaining 2.99 points. The DMI has turned positive on the Daily chart, but the MACD, P-volume, and Money Flow remain negative. I’m still only interested in Royal as a scalp trade at this point, particularly with the uncertainty of the Fed announcement looming. But all of the indicators on GLD are now positive AND there is a nice Hockey Stick Pattern to provide a springboard for a ‘Rope Jump’. So gold is really starting to look interesting.
Just remember that even if gold is attempting to break out from its Major Wave 4 pattern and head higher later this year, it’s still very early in the process. There will be plenty of time to catch the gold train. This is NOT the time to be betting the farm on gold. I still need to see a lot more evidence. But so far, gold is doing everything I expect to see happen during the early stages of a major turn around.
I’m pointing this out to you now so you can watch and learn as this process unfolds.
Like I discuss in Class, the process begins after forming a TLB Pattern. The rise off the bottom then forms a small Hockey Stick that provides support for a ‘Rope Jump’, which usually signals wave 1 or the first wave of the turn around process. So all of the preliminary signs are there now, but I still need to see the ‘Jump’ and pullback before I get aggressive with my gold purchases. Meanwhile, as I’m watching the process unfold, I’m trading (scalping) a few shares of RGLD.
Yeah, Royal is acting like a nervous cat in a room full of rocking chairs right now. It’s down one day, then up the next. But IF I’m right about gold starting its turn around, then what’s happening to RGLD is perfectly normal.
So If you’re trading RGLD now, you have to be prepared for a few wild swings. This is what makes scalp trading a lot of fun. However, in the back of my mind, I’m willing to put up with the swings because I know that IF gold is starting Major Wave 5 up, then its going to new highs. Major Wave 5 up…if it happens, should easily move gold above its old high near 1,900 with a move to 2,200 to 2,500 possible. That’s why ‘m interested in gold now!
As long as the PT indicators on GLD stay positive now, I MUST assume that the next move for the ETF is a ‘Rope Jump’ above the 118 level, probably closer to 119-120. This is what the ‘Stick’ suggests. And IF GLD is going to do this, then RGLD should be right behind or even in front! It’s why I’m looking to scalp RGLD now at every opportunity on the shorter-term bars.
BTW, IF Royal makes a ‘Rope Jump’, its ‘Stick’ suggests a move above 72. Yesterday RGLD closed at 64.78. But like I said, it needs to show me that it wants to move higher with a ‘Rope Jump’ before I do anything but scalp trade. It hasn’t done that yet.
Waiting for the Fed announcement.
That’s what I’m doing,
h
Market Signals for 04-28-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
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