Professor’s Comments August 4, 2015
Posted by OMS at August 4th, 2015
The Dow fell 192 points early and then recovered all but 92 points during the afternoon session, closing at 17,598. Volume was moderate, coming in at 93 percent of its 10-day average. There were 72 new highs and 174 new lows.
Yesterday’s early decline of 193 points on light volume was the Big Move predicted by Thursday’s small change in the A-D oscillator. However by recovering about 50 percent of its early loss by the close, the move brings into question whether wave 3 of 3 down has started or if the decline was the ‘b’ wave of a 3-wave sequence for wave 2 up. An impulsive wave 3 decline should NOT recover 50 percent of its losses. So yesterday’s decline was likely something else.
One of the reasons yesterday’s decline could be part of wave 2 up is the fact that both The Tide and the Dean’s List are still neutral. And as long as these tells remain neutral, a wave ‘c’ of 2 rally back to the 17,900 level is still possible. In my Weekend Strategy Review, I mentioned that the overall pattern for wave 2 up would ‘ideally’ complete between 17,800 -18, 000. But the current market conditions are far from being ‘ideal’, so the wave 2 rally might not get that high. We’ll see.
With The Tide still being neutral, I’m just holding the ‘trial’ positions I have in DXD and QID. I still don’t want to get too aggressive with my shorts. BTW, The Tide on the NASDAQ market is now negative. I don’t show the NASDAQ Tide on the cockpit because it usually tracks The Tide on the NYSE within a day or so. But this time the NASDAQ might be ahead of the NYSE. If you still own NASDAQ stocks, The Tide on the NASDAQ is now working against you.
A lot is happening in the world right now that could trigger a major decline in U.S. equities, but it hasn’t showed up in my indicators yet. Yesterday the Greek stock market fell over 16 percent. China’s market continues to decline, and Puerto Rico defaulted on making a payment on its 72 billion dollar debt. So even though the world markets are looking grim right now and the U.S. markets have fallen slightly, the Money Flow indicators for the Dow and NASDAQ are still positive. This tells me that a lot of foreign money is still coming into the U.S. market which is being perceived as a ‘safe haven’. I do not believe this will continue in the weeks ahead once it becomes apparent that the new Bear will impact all equity markets.
The indicators to watch now are The Tide and the Coaches on the Dow (DIA) and NASDAQ (QQQ). When these indicators turn negative, that’s when I will start to become aggressive with my shorts.
That’s what I’m doing,
h
Market Signals for 08-04-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEU |
SUM IND | POS |
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