Professor’s Comments June 17, 2015
Posted by OMS at June 17th, 2015
The Dow rose 113 points, closing at 17,904. Volume was moderate, coming in at 95 percent of its 10-day average. There were 70 new highs and 85 new lows.
Yesterday’s rally appeared to be a continuation of the previous days bounce off support at the 17,700 level. It is likely that the final wave up of the a-b-c sequence to a top near 18,350+ has started.
One of the reasons I say this is because both Coaches, the Money Flow indicators for the Dow and NASDAQ, are now positive. So money is now flowing into these markets.
The other reason I believe the markets are heading higher is The Professor. When I checked in with him last night, he had 50 stocks listed as longs. In the past, whenever this trend algorithm had 50 or more stocks listed as longs, it led to a significant rally.
Also, the fact that Emeritus also highlighted several stocks for the Honor Roll last night is another good indication that wave ‘c’ up is underway. Remember, Emeritus is also a trend algorithm.
Ok, so the algorithms and pattern are suggesting the market will likely re-test the 18,350+ level. But is this the time to be getting aggressive with new purchases? I don’t think so.
This is because The Tide is negative and the Dean’s List is still neutral. Several inverse index ETFs are still on the List. So any new long position established now would be trading against The Tide. I never like to do that.
When The Tide and the other indicators on the cockpit are at odds with each other, it’s usually because the market is in some type of corrective wave sequence. The large Ending Diagonal Pattern we have been trading for the past several months suggests that the Dow is likely in final wave ‘c’ of ‘e’ up of the pattern. And as I said before, the final leg of an Ending Diagonal Pattern has a nasty habit of truncating. In other words, while the odds now favor a move back up near the 18,350+ level, it doesn’t have to. And with the markets so focused on whether or not a Greece deal gets done, we need to expect a lot of volatility in the days ahead.
This is why I am only looking to scalp trade now. Normally, when the Money Flow indicators turn positive, I look to trade stocks (longs) that Emeritus has highlighted for the Honor Roll. This is what I will be doing today using the 15 minute bars. The only thing that I will not be doing is holding them overnight. That’s because the Summation Index is still negative.
I will also be looking to buy gold. Yesterday, even though GLD fell 0.41 cents to 113.32, the Money Flow indicator remained positive. This is a very Bullish sign for gold. Right now the pattern for GLD suggests the next move will be a ‘Rope Jump’ above the 117 level. Now that’s only 4 points from current levels, but if it happens, it’s a Big Deal for gold. It would tell me that the Major rally in gold that I expect later this year is starting. The MF and P-volume on the Daily chart for GLD have already turned positive, so watch the DMI and MACD.
The gold ETF that I will be looking to buy is GDX. A nice Hockey Stick Pattern has formed on the Daily’s that suggests a move above 20.67. The indicators on the Daily chart are still negative, and GDX is still not on the Dean’s List. But as long as GLD, my ‘Stick in the Sand’ for gold is on the List, it’s telling me that the environment has turned favorable for gold. So if the 15s turn positive, I’ll be looking to scalp a few shares.
The Fed will be announcing it’s policy on interest rates this afternoon at 2pm. So IF the market has an early pop this morning (remember, we always expect it to pop on Fed days) I would expect any early rise to settle down after the pop and trade sideways into the announcement. It will likely make for tough scalping day. And because trying to guess what the market might do after a Fed announcement is only a 50-50 proposition, I won’t be holding a lot of stock going into the announcement. I’d rather wait for the announcement and if the market reaction is positive, look to trade a few stocks from the Honor Roll.
That’s what I’m doing,
h
Market Signals for 06-17-2015 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
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
FAQ
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Category: Professor's Comments