Professor’s Comments August 28, 2014
Posted by OMS at August 28th, 2014
OK, we need to be on our toes now. Just like a smart bettor watches for horses that are ‘on their toes’ during the post parade, we need to be alert and watching for a potential change in trend. Last night the A-D oscillator had a very small change reading of less than 6 points. Readings like this usually result in a Big Move in the market within 1-2 days. And with market averages near the top of well defined patterns and at overbought levels, that Big Move could be to the downside.
Here’s a few things to watch:
The Dean’s List remains positive, but weak. The top two ETFs on the List are Brazilian ETFs with a relatively low RS rating of 2. The two other ETFs ranked 2 are Biotech Fund, PRB, and Bond Fund, TMF. Everything else on the List is ranked 1 or Zero. One good down day in the market could bounce a lot of these ETFs off the List and turn it negative.
DUG is still on the List, so it’s not the time to be buying energy.
There are NO gold stocks on the Dean’s List as gold corrects in what appears to be the ‘b’ wave down of a simple a-b-c pattern. Gold (the metal) is currently trading near 1285. If I’m correct about the pattern, once wave ‘b’ completes, the ‘c’ wave rally should take gold to the 1350 level, possibly higher. Watch for gold stocks and ETFs to start to appear on the Dean’s List. Remember the SIGN: Most gold related issues have formed a nice Hockey Stick Pattern, so all we need now is to see them appear on the Dean’s List with positive Indicators.
Breadth (The Tide) remains positive. However money is now starting to leave the market as evidenced by the negative Coach on DIA. Where is the money going? Hmmm? Take a look a TMF and TLT. There’s a very good reason why the Dean has TMF at the top of his List. Also, with the unrest in the Mid-East and Ukraine, there is a lot of foreign money moving into the perceived safe heaven of U.S. Treasury Bonds. Watch for a Tide change.
Yesterday I posted a chart of DXD, the inverse ETF for the Dow. Take another look at it, especially the diverging P-volume.
Same for TWM. The P-volume remains very strong. If the DMI and MACD turn Green on the Daily Chart, I will add to my position. I like the risk-reward odds at current levels.
If the market starts to move lower, I will be running the Dean’s List during day to see if it turns negative. IF DXD and TWM start to appear on the List, I’ll let you know and start adding to my inverse positions. IF gold stocks and ETFs start to appear on the List , I’ll look to add to my small position in GDX. As I mentioned a few weeks ago, I consider gold to be an intermediate term holding. In other words, I am not trading my gold. I want to own a few shares. …just in case.
That’s what I’m doing,
h
Market Signals for 08-28-2014 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
BREADTH | POS |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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