Professor’s Comments December 11, 2013

Posted by OMS  at December 11th, 2013

The Dow fell 52 points, closing back under 16,000 at 15,973.  The SPX fell 5.7 points to 1802.62.  The SPX continues to hold above 1885 , and until it breaks this level or the indicators turn negative, I can not confirm that wave ‘c’ down of “d” down has started.

Volume on the NYSE was moderate, coming in at 103 percent of its 10 day average.  There were 105 new highs and 79 new lows.

The markets didn’t give me a lot of information yesterday, even with the 52 point drop.  Yesterday’s decline could be part of the Big Move predicted by the small change in the A-D oscillator.  We’ll have to see if the decline continues today, as it will be the second day of the small change signal.  Be patient.

We’re currently at a very critical point in the overall Ending Diagonal Pattern.  IF the indexes start to fall from current levels, it will tell me a lot about what the markets will do in the months ahead.  A small decline for wave “d” down would be very positive going forward.  A larger decline would be a warning that the final top might not reach the 17,000 level.  And IF the Dow does not decline and starts to break 1813 to the upside, it would tell me that the pattern has morphed into a continuation pattern, which at the moment does not look very strong and could terminate near 16,300.

Remember, the pullback I’m  expecting is essentially the Blade of a small Hockey Stick Pattern.  And in the Professor’s Methodology, we use Sticks and Blades to determine the target for the next move in the market. Right now, the pattern we’re currently trading is the 1400 point stick that started from the 14,800 level back in early October.  There is no Blade.  That’s what needs to be developed now.  The problem is that the rally from October has also produced a THT Pattern and there was a negative DMI change associated with that THT Pattern.  It was a false change as the Professor did not confirm the change like he did in early October.  Remember how he did this?  That’s when I went all in.  But on 6 December, when the DMI turned positive again, The Professor did not confirm that change either.  So I’m getting mixed signals from him.  That’s why with negative breadth indicators on the Board, I’m in no mood to be buying stocks.

The Dean’s List remains positive, as do most of the cockpit indicators.  But the Coach on the Dow (DIA) is negative.  It’s telling me that the Big Boys are now starting to take money out of the market.  This is different from the situation we had only a month ago, when there was a lot of rotation going on.  Back then the institutions were keeping money in the market.  When they took profits on their overpriced stocks, they used the money to buy under priced stocks like Apple.   Now they’re not doing this….at least with Dow stocks.   This is a development that we need to watch closely.

I checked in with the Professor last night just see if he was seeing anything.  The only thing he saw was slight bias to the downside, with 13 shorts and only 3 longs.  If the number of shorts starts to increase, I’ll let you know.  Especially if the DMI starts to turn negative.  That could signal trouble.

After talking about RGLD yesterday. I see that she popped 2.28 points to 47.5.  By appearing on the Dean’s List, she told me that she was back in town.   So now, RGLD is back on the Dean’s List with a HS Pattern after a Rope Jump.  Hmmm?  All I need to see now is for the indicators to turn positive and I’ll give her a call..  Nothing serious mind you.  Just a date.

Also of note during the past few days is the fact that Emeritus has started to highlight a few stocks as shorts for the Honor Roll.  Last night he highlighted Mosaic, MOS,.  The stock has a very interesting inverse Hockey Stick pattern that suggests significantly lower prices.  Right now, with all the uncertainty in the patterns of the indexes, I’m just going to watch the stock.  However, IF Emeritus starts to highlight more stocks as shorts, I will be paying closer attention.  As you know, I like to trade Honor Roll stocks when several stocks start to appear on the list.  When this happens, it’s usually a good indication that a trend is starting.  When there’s only one or two, I don’t get that excited.

Anyhow, all I will be doing today is watching.

Watching gold, watching MOS, and keeping an eye on the SPX, especially if it starts to move below 1890.

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
FAQ

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