Professor’s Comments January 23, 2014

Posted by OMS  at January 23rd, 2014

The markets were mixed yesterday with the Dow dropping 41 points to close at 16,333 while the S&P and NASDAQ were up fractionally. Volume was moderate, coming in at 102 percent  of its 10 day average. There were 189 new highs and 26 new lows.

Apple rose 2.44 points which was enough to turn the cockpit indicators on the QQQ back to Green.  The stock has been forming a nice Blade since coming off its high several weeks back and now appears ready to resume its upward trend.  The PT indicators on the stock are still Red, but IF they start to turn Green in the days ahead, you might want to pay close attention to AAPL and the NASDAQ.

The reason I’m talking about the NASDAQ today is because it appears to be the first index to be breaking out from its sideways consolidation pattern.

The SPX is still having problems getting past 1850.  Yesterday, while everyone was watching the Dow being pulled down by IBM, which was off over 6 points, the broader S&P and NASDAQ were quietly trading sideways to higher.  This is exactly the sort of trading action that you want to see as the Bands on the Blade continue to narrow.

As long as the Dean’s List, the cockpit indicators, and Professor remain positive, the odds favor an upside breakout.

I also found it interesting to see Emeritus highlight two energy stocks last night.  If you recall, he also highlighted Schlumberger, SLB, the previous day.  However, when I look at a chart of the two crude oil ETFs on the Dean’s List, OIL and USO, they’re not anything special.  Both ETFs remain in down trends and have TLB patterns in place that could support a pop in the energy sector IF the PT indicators turn positive.  But that’s about it…a pop. The crude charts are telling me that the basic commodity will have to do a lot of work in the weeks ahead before it starts to trend higher.

On the other hand, probably the most interesting ETF on the Dean’s List now is  XOP, the S&P Oil and Gas Exploration and Production ETF. This ETF is in a clear, well established Uptrend.  And yesterday the ETF looked like it was breaking out from a beautiful Hockey Stick pattern that has taken three months to develop.  Because of this, and the fact that two oil and gas exploration companies were recently highlighted by Emeritus, the explorers could be the group within the Energy Sector to watch in the weeks ahead.  Remember, we saw a similar thing happen about two months ago with the Refiners.  That’s when I was talking about stocks like MPC which was beginning its 20 point run from 71 to 91.  If the market starts to break higher, the Dean and Emeritus could be telling us that it will be the explorers and producers that will lead the way higher this time. Because of this, I’m very comfortable holding my shares of SLB while I wait for the overall market to complete its consolidation pattern.

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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