Professor’s Comments July 25, 2014
Posted by OMS at July 25th, 2014
The Dow fell 3 points to 17,084. Volume was moderate coming in at 104 percent of its 10 day average. There were 210 hew highs and 21 new lows.
Not much changed yesterday. All of my Lists and indicators remain mixed, so until they start to line up one way or the other, there isn’t much point in trying to establish new positions.
The one thing I did note was that there was a ‘relatively’ small change in the A-D oscillator yesterday of about 14 points. This small change does not meet my normal criteria of 10 points, but I mention it because for the past year or so, there have been several Big Moves with small changes of up to 16 points. So we need to be on the lookout for a Big Move within the next 1-2 days.
Wednesday’s upside breakout from the small triangle pattern of the past few weeks suggests that the Big Move will likely be to the upside. The Dean’s List also supports this.
However at this point, the DMI on the Dow (DIA) is negative. So the Big Move could be either up or down. If the move is to the upside, it should be enough to propel the Dow to new highs, probably to the 17,200-17,250 level, with the SPX reaching 2000.
IF the move is to the downside, then it’s likely that the next down wave of the larger Ending Diagonal Pattern is starting. This wave should take the S&P back down to the 1930 level or lower.
So once again, it boils down to an odds game with a possible 200 Dow points of upside vs. 800 points of downside risk. I don’t like the odds and plan to remain on the sidelines.
BTW, all of the PT indicators on GLD, the physical gold ETF, turned Red yesterday. With the 50 < 200 and Red indicators, it appears that the next down wave has started. I have been avoiding gold like the plague, even when it turned Green after it s recent ‘Rope Jump’. Last week I mentioned that I did not buy GLD when it turned Green on 16 June because I felt it was too pricy after the gap open. I wanted to see if during the pullback, the 50 would start to move back above the 200, putting GLD into an Uptrend.
It didn’t happen. The indictors turned RED. So now I’ll have to wait for the indicators to turn Green again before considering the ETF for purchase. It might take a while.
I’m still in my ‘trade’ of TWM. All of the PT indicators remain Green. The past few days of rising markets have given me several opportunities to add to the trade when the daily 2-period RSI Wilder became oversold. But because I already had a full half position, I passed on the opportunity. However I know from the emails that I have been receiving that many students did take the opportunity to establish trading positions when the 2-period RSI Wilder became oversold. :>) But just remember that while this ‘trade’ currently has Green indicators, IF the indicators turn Red, just like with GLD….I’ll kiss it good-by and look to re-establish the position after the market tops.
That’s what I’m doing,
h
Market Signals for 07-25-2014 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
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