Professor’s Comments June 20, 2014
Posted by OMS at June 20th, 2014
The Dow rose 15 points yesterday, closing at 16,921. Volume was moderate, coming in at 104 percent of its 10 day moving average. There were 279 new highs and only 12 new lows.
Not much changed yesterday. The pattern on the Dow still suggests that it could be starting a corrective wave 4 triangle after topping just shy of 16,950 last week. As long as the Dow remains below 16,950, without a new up-trend starting, I must assume that a wave 4 correction is taking place. The one thing that we know about wave 4 triangles is that they are extremely difficuly to trade. So even IF the Dow does have a small rally from current levels, it would still not rule out a move down to 16,300. Be careful!
There was a very small change in the A-D oscillator yesterday, so we need to be on the lookout for another Big Move within the next 1-2 days.
If the Big Move starts to take the Dow above 16,950, it will mean that the Dow is NOT starting a wave 4 corrective sequence, and that the final move toward a top above 17,000 is underway.
I ran The Professor algorithm yesterday, just to see if he saw anything that would give me a clue as to the direction of the Big Move. He had 5 stocks as beginning new up trends and 4 starting new downtrends. So I didn’t learn anything from him.
Meanwhile the Dean’s List and the cockpit indicators remain positive, so I will continue to maintain my positive bias. But like I said above, the pattern does not suggest that it will support a strong move to the upside at this point, so effectively I have mixed signals. With mixed signals, I’m mostly on the sidelines.
Gold made a strong upside move of over 40 points yesterday on news that ISIS rebels had captured an Iraqi oil refinery and Russian troops were assembling on the Ukraine boarder. This caused GLD, the gold ETF, to ‘Jump the Ropes’ on its Daily Chart. Whenever a stock ‘Jumps the Ropes’ after a TLB Pattern, it needs to be viewed as a potential wave 1 up of a new pattern.
If this is the case, GLD could trade to a target of128.25, which is the interim high between the first two lows of its TLB Pattern, before wave 1 completes. Yesterday, GLD closed at 126.94 after reaching an intraday high of 127.23.
This means that GLD could have another point or so before wave 1 up ends and corrective wave 2 down begins. If GLD continues to trade above its moving averages and starts to pull the 50 above the 200, that’s where I will start looking to buy gold. Not now. Right now, GLD is still in a downtrend, and a successful counter attack by the Iraqi forces could change the situation in Iraq very quickly, sending gold prices tumbling. Until I see a Blade form and a moving average cross, I’m staying away from gold.
That’s what I’m doing,
h
Market Signals for 06-20-2014 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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.
Category: Professor's Comments