Professor’s Comments June 24, 2015
Posted by OMS at June 24th, 2015
The Dow rose 24 points, closing at 18,144. Volume was moderate, coming in at 96 percent of its 10-day average. There were 150 new highs and 51 new lows.
Not much changed with yesterday’s trading.
I did notice something very unusual last night when I ran The Professor. After what was a relatively quiet day of trading, he had 3 longs….which you would expect. However he also had 20 stocks listed as shorts. That’s a lot of shorts.
Remember, the Professor algorithm is also a trend algorithm. I use it to confirm DMI turns. When he identifies more than 50 stocks as longs, it usually leads to a significant rally in the Dow. We saw how this happened recently after the Dow bottomed on 15 June at 17,698. The next day, the Professor highlighted 50 stocks telling me that wave ‘c’ up of ‘e’ up was likely starting.
But on the short side its a little different. The number of stocks needed to signal a significant decline is only 25-28. So last night, when I saw the Professor highlight 20 stocks as shorts, I was surprised. Especially when he highlighted them on a day when the Dow rallied for 24 points. Hmmm?
Anyhow, the pattern still suggests that the Dow will top near the 18,350 level. The Dean’s List is still positive, The Tide is neutral, and the Coaches are split. So we have mixed signals.
Mixed signals are something you see in a corrective wave, not an impulsive wave. So taken together with the pattern, it’s highly likely that the market is in corrective wave ‘c’ up. And because we know that corrective waves do not go straight up, it’s likely that the Professor is signaling some type of pullback for the next few days.
We’ll have to watch this pullback very closely. Remember, an Ending Diagonal Pattern can truncate. It does not have to reach 18,350+.
But as long as the cockpit indicators remain mixed, and don’t turn negative, the odds suggest that we will see higher prices after the pullback. On the other hand, IF the indicators turn negative, they could be telling us that the next Major wave down has started.
If the market pulls back today, and I can get intraday data (I’m not sure if my temporary data feed from Interactive Brokers will allow this), I’ll run the Professor to see what he says. We need to pay attention to any algorithm that could be suggesting the start of a new down trend.
Gold and silver stocks continued to trade sideways of the shorter term bars causing the Bands to narrow even further. This tells me that a Big Move is coming in the metals. However at this point, that Big Move could be either up or down. If you get a chance today, you might want to look at this scalp trade set-up on the 15s or now on the 30 min bars on stocks like SLW and GDX. If these stocks break higher from this pattern, I’m a buyer. If they break lower, I’ll leave them along and look to establish positions from lower levels. With several significant news events still on the table, I do not want to be short the metals now, even as a scalp.
That’s what I’m doing,
h
Market Signals for 06-24-2015 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
SUM IND | POS |
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