Professor’s Comments July 23, 2015
Posted by OMS at July 23rd, 2015
The Dow fell 68 points, closing at 17,851. Volume was heavy, coming in at 114 percent of its 10-day average. There were 72 new highs and 377 new lows.
Even though the markets continued to decline yesterday, there wasn’t a lot of change in my indicators. The Dean’s List is still mixed, and the key Money Flow indicators on the cockpit remain positive.
So without seeing any new inverse index ETFs on the Dean’s List, besides DXD which I already own, I’m just waiting for the List to turn negative before doing anything else. I’m also hesitant about getting aggressively short because both Coaches are still positive. As I’ve pointed out many times on these pages, I never like to trade against The Tide or Money Flow.
One thing that should be noted about yesterday’s trading action is how the number of new lows is starting to increase. Yesterday’s 377 new lows is a sign of a very unhealthy market. Yeah, the Dow has only fallen 286 points so far on the current leg down, but the number of new lows far exceeds what I would expect for a 300 point drop.
Breadth is the fuel that drives markets higher. And right now, after seeing those 377 new lows, the breadth is telling me that there is a major hole in the gas tank.
Apple shares got hit hard yesterday after concern about its future earnings. The stock was down almost 9 points pre-market trading but only finished down 5.53 at 125.22. The thing I found interesting about AAPL yesterday was that despite the decline, its Money Flow indicator actually rose at day’s end. In other words, after the initial reaction to the bad news, a lot of people (institutions) rushed in to buy AAPL at the lower price. I guess they didn’t notice that the stock has been forming a THT Pattern during the past few months with a 28 April high of 134.54. And after yesterday’s decline, the DMI is now negative. If the Money Flow indicator starts to turn negative now, those institutions who bought AAPL yesterday might be better served by buying a copy of the Professor’s book.
Remember what I always say about earnings. It’s NOT the actual earnings number that matters. The number can be manipulated to look better (or worse) than it actually is. What matters is the stocks reaction to the earning’s announcement. That’s what matters most. So yesterday, despite the fact that a lot of people were buying APPL at reduced prices, the stock finished down over 5 points! The reaction to the earnings announcement was terrible!!! Like I said, be careful if you own Apple shares now if the MF indicator starts to turn negative.
BTW, AAPL is a component of the Dow 30. It has support at the 106 level based on the interim low between the first two highs. Si IF APPL starts to decline to its support, it will put a lot of pressure on the index.
Bottom Line: I’m still short the Dow with a ‘trial’ position in DXD, and I’m long a ‘trial’ position in GDX. I’m just waiting for the Dean’s List to turn negative before adding a few more inverse index ETFs to the mix. Similarly, I’m also waiting for a few gold stocks and ETFs to appear on the List before doing anything else.
That’s what I’m doing,
h
Market Signals for 07-23-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
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Category: Professor's Comments