Professor’s Comments July 23, 2013

Posted by professor  at July 23rd, 2013

The Dow rose 1 point in lackluster trading, closing at 15,545.  The flat trading produced a small change in the A-D oscillator of 6.6 points, so we need to be on the lookout for a Big Move within the next 1-2 days.  Volume was light, coming in at 93 percent of its 10 day average.  There were 325 new highs and 66 new lows.

It appears that wave 1 Up of final wave ‘c’ up is nearing completion.  With the market trading mostly sideways for the past week, the pattern appears to need one more small leg up before wave 1 up completes.  After that, a corrective wave 2 down should develop, probably next week.  This is where I will be looking to buy a few stocks, when the 2-period RSI Wilder becomes oversold.  Not now.

Yesterday I managed to scalp trade Pfizer, PFR, a stock highlighter by Emeritus, for 35 cents.  It wasn’t much, but it pays the bills. Emeritus has not been highlighting many stocks the past few weeks as the market has traded sideways.  This is because he is a trend algorithm, and the fact that he has been so silent tells us that we are NOT in a trend mode.  I would expect that he will remain silent until the wave 2 down is over.  But once this corrective wave is complete, you might want to pay attention when he starts singing again.  Wave 3 up could be starting.

It’s still too early for me to make any predictions about  where wave 2 down will end.  However, I would expect about a 50 percent correction from current levels.  So If the Dow starts to get near the 15,100 level, that’s were I will start looking for Rifle Trades.

Yesterday the Rifle Trade set-up in TBT did NOT trigger, as the ETF stayed Red on the 60s all day.

FXP fell 0.05 cents yesterday.  The ETF appears to be developing a complex zig-zag pattern for its wave 2.  If this is the case, it could fall 2-3 points from current levels before the pattern completes.  So with FXI, the long China ETF now on the Dean’s List, I’m going to exit FXP and stand on the sidelines for the time being. I purchased my shares of FXP at the DMI turn near 20 level, so I.will look to exit the Basic Position with a small profit. This is mostly because I took some money off the table when the stock was trading at the 24-26 level. 

I have to tell you that I had high hopes for this trade.  The Pattern was Picture Perfect, and longer term I really want to be short China.  But right now with FXI on the Dean’s List and the PT indicators going against me, I just do not want to fight the negative indicators.  If things change and FXI re-appears on the Dean’s List, that’s when I’ll become interested in FXP again.  Not now.

VRTX pulled back over 1.50 yesterday, but rallied to close down 0.27 cents at 88.24.  This extremely volatile stock appears to be entering the ‘Free Willy’ mode.  All I’m doing now is watching to see IF it can hit its initial target of 92.  If it does, that’s where I will pull a few bucks off the table and place a stop back at my entry point.  From then on I will use Rifle Trading techniques, just like I planed to do with FXP. 

BTW, I am enclosing a chart of the Dow (DJI) with today’s Comments so you can see how I envision the final wave ‘c’ of E up to unfold.  The chart is not necessarily to scale as far as time.  But the thing I wanted to show is how the final push up to 16,800 should unfold in five waves.  Especially now that we could be getting very close to the end of wave 1 up.

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.