Professor’s Comments August 9, 2013 update

Posted by professor  at August 9th, 2013

One of the stocks I’m watching today is World Food Markets, WFM, on the 60s.

Last week one of my algorithms identified it as a potential short. The stock is typical of the many stocks that are currently in Uptrends on the Daily’s that have THT Patterns.

So If the PT indicators on the Dailys start to turn negative, I will likely look to play it for a 5 percent drop.

However that’s not the only reason I’m bringing it to your attention this morning.

What intrigues me about the stock is the fact that the Bollinger Bands on the Daily’s are getting pretty tight. Tight like in Big Move tight. If the indicators on WFM start to turn negative, the downside move could be a lot more than 5 percent. And it could happen very quickly.

WFM is not your typical supermarket. With a P/E near 35, it certainly is not cheap.

And it you put the stock under a microscope and look at the 60s, WFM appears to be forming a Classic H&S Reversal Pattern. If the stock breaks below the 54.48 level, it would move below the two shoulders and trigger a Classic Sell Signal.

But I’ll be taking my cue from the DMI turn on the Daily’s. If WFM starts to breakdown, it’s likely that many stocks with similar patterns will start to experience similar breakdowns. Its another reason I’m watching WFM.

Just remember, IF the indicators do not turn negative, those tight Bands could also cause the stock to move considerably higher. So pay close attention to the indicators.

The PT indicators on Silver, SLV, have turned positive on the Daily’s after a TLB pattern.

So silver, SLV, is now on the Dean’s List with a #2 RS rating, with a patten, with positive indicators. Hmmm? (think about the SIGN)

Just saying….

I was just looking at the Bollinger Bands on the Daily Dow (DIA). Right now, the DMI and P-vol have shifted to the negative side. If the momentum (MACD) starts to turn negative, things could start to get ugly very quickly. Those tight Bands usually lead to Big Moves.

Be careful with your big caps.

That’s what I’m doing,

h

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends

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.