Professor’s Comments June 26, 2015

Posted by OMS  at June 26th, 2015

The Dow started off with a quick 70 point rise, but couldn’t hold the early gains and eventually closed down 76 points at 17,890.  Volume was moderate, coming in at 102 percent of its 10-day average.  There were 88 new highs and 116 new lows.

Yesterday’s trading turned The Tide negative.  However the cockpit indicators are still mixed as both Coaches are negative, with a neutral Dean’s List.   As of last night, there were two inverse index ETFs (DXD and SH) as well as two positive index ETFs for the NASDAQ and Russell 2K (QQQ and IWM) on the List.

Also, yesterday’s trading was NOT impulsive.  The afternoon decline started off strong, but it slowed as the market moved toward the close.  So with two positive index ETFs on the Dean’s List, it’s still possible that a rally could start from current levels.

Remember, the pattern for wave ‘c’ of ‘e’ up is still not complete.  It would have been much easier for me to get negative if the Dow moved above the 18,350+ level before starting to decline.  But it didn’t.  It only got as high as 18,189.  This means that IF I am to assume that the market reached its final wave ‘e’ top on 23 June, it also means that the final wave truncated.  And this assumption is only a 50-50 proposition at best.  Actually, the better bet now from a pattern perspective is for a spike rally. The 2-period RSI Wilder is oversold with no trend showing on the CCI.

Right now, rising trendline support on the Dow is near the 17,750 level.  If this level is broken, it would suggest that the first wave of the new Bear Market has started.  This thesis would be supported if all four of the inverse index ETFs appeared on the Dean’s List.

But for now, with mixed signals on the cockpit and with the Greece debt issue still unresolved, it’s like trading with a ticking time bomb in your pocket.  If a deal gets done over the weekend, the Dow could quickly shoot up 300 points.  Think spike rally.  On the other hand, if talks collapse and no deal is reached, the Dow could fall 300+ points just as quickly. 

This is why I’m still only looking to scalp trade.  I do not want to be holding a lot of stock going into the weekend.  There’s way too much Red showing on the cockpit now. 

That’s what I’m doing,

h

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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