Professor’s Comments January 29, 2015
Posted by OMS at January 29th, 2015
The Dow fell another 195 points yesterday, closing ay 17,191. Volume was moderate, coming in at 105 percent of its 10-day average. There were 350 new highs and 100 new lows.
Yesterday’s decline was very interesting. The Dow was actually up almost 100 points intraday before the Fed announced that they would take their time before raising interest rates The news caused the two Bond ETFs on the Dean’s List to soar. TMF jumped over 5 points! It’s been on the List for weeks!
Hmmm? Do you think the Fed is concerned about the economy? Maybe things aren’t as great as the cheerleaders in the Administration and on CNBC have been saying they are.
Yesterday’s decline also happened on a day when Apple (AAPL) announced blockbuster earnings which saw the stock soar almost 9 points before closing up 6.17. The burst caused all the PT indicators on the stock to turn positive, and now they’re Green after a pretty nice Hockey Stick pattern has formed on the Daily’s. There reason I mention this today is because I find it very difficult for a Major Market decline to start with Green indicators on Apple.
Just about all of my Lists and indicators turned negative yesterday. Everything except The Tide. It changed to neutral (Yellow). That’s because the new Hi-Lo oscillator is still positive. Actually the indicator is still very positive. The 350 new highs that were made yesterday were the largest number of new highs I’ve seen in a while. So something strange is going on.
Yeah, I’m seeing a lot of Sell signals now, but remember, I still can’t rule out the scenario that says the Dow will rally back to 18,000 until the 17,000 level is broken.
Yesterday’s decline dropped the 35 period CCI on the Dow below -100 putting the index into the Trend Mode. However the CCI on the NASDAQ is still only a neutral -37.3. So without a down trend going on in BOTH markets, it’s possible (likely) that the markets will rally from the current oversold conditions for a few days before the real test of 17,000 begins.
Also, we’re in that Bullish end-of month period now, so the market will likely have a positive bias for the next 2 days.
But forget that. Here’s the thing you need to understand: During the next few days, we MUST determine whether wave 3 of Major Wave 1 down down is starting or not. If the Bearish scenario is taking place, then the next wave down MUST be an impulse wave. It must act like an impulse wave and move straight down. It can’t be choppy. It has to drop like a rock! It’s important that we see an impulse wave now, because this happens, then we’ll know that the Major Bull Market that has been in place since March 2009 is OVER. Then as traders, we will be able to start shorting any rallies with confidence. But we don’t know this yet. Right now, the Dow is stil in an Uptrend with its 50 still above the 200. So it’s still very early to be talking about a Bear Market. However, IF we start to see an impulse wave develop, it will slam the odds heavily in favor of the Bear starting.
This is why I’m being patient.
Right now I’m mostly on the sidelines. I’m not in any hurry to get short with a lot of inverse index ETFs. There are several reasons for this. The first is that a significant rally is still possible from these levels because The Tide is only neutral. Also, if we start to break below 17,000 I believe the next wave down could be a monster. There will be plenty of opportunities to get short. I’ve been saying 15,800 as the target, which is near the 15 October low. But in reality, IF the Dow start to break below 17,000, I believe the target is closer to 15,000. It could be very painful.
So I’m being patient….from the sidelines.
I’m only holding a few ‘trial’ shares of energy companies now. Yesterday, most of these shares got hit pretty hard along with the rest of the market. However the PT indicators are still Green, and as long as they stay positive, I will continue to hold them. That’s the rule for buying ‘trial’ shares after a TLB Pattern.
I still have my eye on gold which appears to be starting its wave 2 correction. GDX continues to trade close to its 200 and is now pulling the 50 closer to the 200 each day. It’s doing exactly what I want it to do. Once a nice Blade develops, and the Bands start to tighten, that’s when I’ll become very interested in gold. Not now.
Watching.
That’s what I’m doing,
h
Market Signals for 01-29-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEU |
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