Professor’s Comments June 25, 2014
Posted by OMS at June 25th, 2014
The Dow fell 119 points, closing at 16,818. Volume was moderate, coming in at 104 percent of its 10 day average. There were 194 new highs and 23 new lows.
It’s still early, but it appears that yesterday’s decline was the start of the corrective wave that I have been expecting. At this point, with 2 of the 3 PT indicators remaining positive, the signals remain mixed. However now, the odds are starting to favor a decline, possibly toward 16,300 on the Dow.
Yesterday’s 119 point decline was the Big Move predicted by the two recent small change signals on the A-D oscillator.
If you’re new to The Professor’s Methodology, you might want to pay more attention to the times when the A-D oscillator produces a small change signal. Its ability to predict a move over 100 points in the Dow within 1-2 days has been very reliable. But while the A-D oscillator tells us that a Big Move is coming, it doesn’t tell us the direction of the move. The Big Move could be up or down.
So yesterday, after I mentioned that one of the new oscillators that I have been working on produced a Sell Signal, I was very anxious to watch how the market traded. This new oscillator generated Sell Signals on 3 April and 7 May, which marked the start of corrective declines. Wouldn’t it be something if this new oscillator could tell us the direction of the Big Move from the small change signal in the A-D oscillator. Hmmm?
It the new oscillator could reliably determine the direction of the move, it opens up the possibility of trading short term options, especially IF both the small change signal AND the Buy-Sell directionality signal could be posted before the market closes. This would give short-term traders a significant edge while waiting for the Big Move to occur. Options would also reduce the amount of money involved in the trade and limit losses to the cost of the option.
I plan to do more research on using the new oscillator in combination with the Small Change Signal from the A-D oscillator during the next few weeks. I’ll let you know how it turns out. But in the interim, IF I get a new signal, I’ll post it so you can evaluate it for yourself.
I was stopped out of all of my energy positions yesterday. As I discussed in yesterday’s comments, by using a ‘tight stop’ placed at the previous day’s low (70), I saved myself almost 2 bucks. HAL closed at 68.18.
So now I’m flat and on the sidelines. I want to see if yesterday’s decline starts to develop legs. Remember, we still have two recent VIX Sell Signals on the Board, and are at place in the pattern where the odds favor additional decline. With mixed signals on the Board, and a positive Dean’s List, there is still a possibility that the markets could push higher from curent levels, so I’m not anywhere close to establishing short positions. That’s why I’m only watching now.
That’s what I’m doing,
h
Market Signals for 06-25-2014 |
|
---|---|
DMI (DIA) | POS |
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