Professor’s Comments July 24, 2013

Posted by professor  at July 24th, 2013

The Dow rose 22 points.,closing at 15,567. Volume was slightly heavier than normal, coming in at 104 percent of its 10 day average. There were 266 new highs and only 28 new lows.

There was another small change in the A-D oscillator last night, this time only 6.13 points. So we need to be on the lookout for a Big Move within the next 1-2 days.

If you take a close look at the Dean’s List this morning, you will notice that QQQ and QLD, the two positive Nasdaq ETFs have dropped off the List, being replaced by the inverse QID. SSG, the inverse semiconductor ETF, is also on the List, so the Dean is clearly warning to be careful with your technology stocks. Wave 2 down of final wave ‘c’ up could be starting.

Right now, the positive index ETFs for the Dow, S&P 500 and Russell 2000 are still on the List, but DIA has dropped to the bottom. If these ETFs start to fall off the List, it would be confirmation that wave 2 down has started. I would view this as a good thing, because wave 2 down should give us a nice buying opportunity once it bottoms.

I would be very careful about initiating any new positions in the equity markets at this time. We could be getting very close to the top of wave 1 up.

Emeritus was silent again last night. I have been scalp trading most of his Honor Roll picks for the past few weeks, and most have been winners. His latest pick of Pfizer, PFE closed up a few cents yesterday, after reaching a high of 29.53. Pfizer is not a go-go stock. It’s almost like watching grass grow. But to see Emeritus highlight a stock like PFE after having it develop a nice Hockey Stick pattern warms my heart. It tells me that the Honor Roll should be a good place to look for stocks to Position Trade for wave 3 up.

The Dean is highlighting the metals again, wih nine of the top stocks and ETFs on his List being related to gold and silver. So is this the time to get involved with them again? Or is this just another false alarm, like so many we’ve seen during the past year? Hmmm?

On the positive side, several of the gold rabbits heading the List, including Royal, have had their DMI turn positive during the past two days. And this has occurred after a TLB Pattern. And as you know from Class, I always look to trade a stock that turns positive after a TLB pattern. That’s because a TLB pattern is the best pattern I know of for trading a potential reversal. The move after the DMI turn is usually wave 1 up of a Major 5 wave sequence. If the wave is confirmed by a ‘rope jump’ then we know there is a good chance that the stock is reversing.

But we don’t know with any degree of certainty that a reversal is happening now. All we know is that the DMI has turned for a few rabbits. Can you trade them? Yes. But the key word is ‘trade’. In other words, this is NOT the time to bet the farm on the metals. The time to get aggressive with any metal purchases will come later…after we see a ‘rope jump’ and a wave 2 pullback. Then the odds will be heavily stacked in our favor. But right now, it’s a crap shoot. If you want to play the metals, just trade a few shares like you would with any ‘trade’. But pay strict attention to the DMI. If it starts to turn negative, get out. That’s because the current pattern does NOT appear to be complete yet. There is still a possibility that gold could turn lower and make one final leg down to near the 1150 level. That’s right,,,1150! We’re at 1340 now. So be careful! Until I see a ‘rope jump’ and a 2 wave pullback, the metals are just trades.

TBT, the inverse 20+year Bond Fund is also on the Dean’s List, It is in an uptrend with 2 of the 3 PT indicators (the P-vol is negative), so the PT indicators are still considered positive. And because the 2-period RSI Wilder has become oversold, it makes it a candidate for a Rifle Trade. I was watching TBT yesterday as it shot out of the gate, jumping over a point. But after the ‘gap’ opening, the ETF traded sideways to form a small Hockey Stick pattern on the 60s. This should be enough of a ‘Blade’ to start the ETF moving higher. We’ll see.

BTW, TBT should be a good learning experience in miniature for students. That’s because there are two patterns in play on the 60s now. The first is a small TLB Pattern that has an interim high of 75.95 on 12 July. The second is the small HSw/Blade Pattern that projects to 75.39. So we have two near term targets for the move. TBT is currently trading at 73.69.

But keep in mind that IF TBT starts to move higher, there is a larger 3 month HS Pattern in place that could take the ETF into the mid to high 80s. That’s why I’m interested in TBT now. It could present us with several opportunities for Rifle Trades along the way.

That’s what I’m doing.

h

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.