Professor’s Comments January 22, 2014
Posted by OMS at January 22nd, 2014
The Dow fell 44 points, closing at 16,414. The SPX was a lot stronger finishing the day up 5 points, closing at 1843. Volume was moderate coming in at 106 percent of its 10 day average. There were 238 new highs and 24 new lows.
A few minutes after the market opned, the SPX ran into strong resistance just under the 1850 level and started to pullback. The Dow actually fell just over 200 points intraday from its opening high which was the Big Move predicted by Thursday’s small change in the A-D oscillator.
Once traders knew that a breakout was not in the cards, the ensuing decline provided them with a good opportunity to enter long positions.
I started to run The Professor just after the open, and even though the amount of data for him to digest was small, it was very apparent that a breakout was not occurring. He continued to sleep for most of the morning.
However after lunch, The Professor started to wake up. Near the 2pm mark, I posted a few comments let you know he was highlighting 23 stocks to the long side. In other words, even though the Dow was still down about 50 points, The Professor was not a bit concerned that a new downtrend was starting.
So knowing that the markets were still in a consolidation pattern that was the Blade of a Hockey Stick pattern, the pullback made for a nice entry point.
BTW, The Professor finished the day with 30 longs and 6 shorts. This is pretty significant, because he’s telling us that the rally gun is loaded. During the weekend I motioned that The Professor was sleeping on Friday with only 4 longs and 3 shorts. So without any indication of a new trend developing on Friday, it is EXTREMELY hard for the markets to get something going from a dead stop.
However, with 30 longs being highlighted, the market now has a bit of a running start, If the market trades sideways or slightly down during the next day or so, it will be relatively easy for it to start a rally. We’ve see this type of ‘get ready’ warning in previous rallies, where The Professor starts to highlight 25-40 stocks just before he issues his Buy signal. And that’s why I will be paying close attention to The Professor now. If he starts to highlight more than 50 stocks, I’ll let you know.
Meanwhile the Dean’s List remains positive and the cockpit indicators are mostly positive. The Bollinger Bands on the Dow continue to narrow telling us that a Big Move is coming.
I’m still very concerned about the negative and diverging P-volume on the NASDAQ (QQQ). This will need to turn around IF the NASDAQ is going to make a significant rally from current levels. I still have a tough time seeing how a new rally will start on the NASDAQ with negative PT indicators on Apple (AAPL).
Anyhow, all I’m doing now is watching for a breakout.from the current Blade.
That’s what I’m doing,
BTW, tonight’s Class at UNF is on Hockey Sticks. How appropriate?
|Market Signals for
Not sure of the terminology we use? Check out these articles
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